China’s Agricultural Modernization and Economies of Scale: Barriers and Solutions

5月 18, 2017

Cai Fang and Wang Meiyan

Chinese Academy of Social Sciences (CASS), Beijing, China Institute of Population and Labor Economics, CASS

Abstract: This paper identifies three stages in China’s agricultural development with

reference to macroeconomic development and international experience. While the first

two stages focused on ensuring food security and raising farmer’s income, the current

stage must give priority to modernizing agricultural production. The lack of progress in

this area is due to the following reasons: diminishing return to capital as a result of small

and scattered farming operation which has compromised agricultural competitiveness;

agriculture is overdependent on subsidy and protection under the conventional wisdom

of the uniqueness of agriculture. This paper attempts to reveal the barriers to China’s

agricultural modernization and proposes recommendations on reforming the land and

household registration systems to increase the economies of scale and productivity.

Keywords: stages of agricultural development, mode of agricultural production, economy

of scale, agricultural production function

JEL Classiﬁcation Code: Q10, Q18