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Monday, May 19, 2008

Lin on China's food situation

Yifu Lin, now Chief Economist at World Bank, talks about China's food situation and how to provide farmers more incentives to grow crops (a lot of land are being wasted due to young labor migrated to the east coast). The article is in Chinese.
 
My impression from reading the interview is that China does not seem to have a serious food problem for now. Lin emphasized that government should allow food price to increase so to offer farmer incentives return to their land. I agree. But this should be done gradually to avoid inflation spike.  In the long term, food price should be set by marketplace.  
 
In order to achieve that, China sooner or later will face the question of how to deal with the property rights of agricultural land. Without clearly defined property rights, people cannot sell or buy their land freely, land consolidation is thus impossible, the latter of which is the precondition for scale of economy to take place.  But this is going to take a long time, and it's closely tied to the progress of China's urbanization and labor migration.
 
The alternative to scale of economy solution is technology.  Increasing productivity without scale of economy is certainly possible and is probably a more realistic solution considering the fact that in China a large chunk of labor (about 50%) are still working on the agricultural sector.