Innovation, Agricultural Productivity and Sustainability in China

image of Innovation, Agricultural Productivity and Sustainability in China

The expansion of agricultural production in China has been remarkable, but at the expense of the sustainable use of its natural resources. To counter this, as well as to face problems due to rising labour costs and a rapidly ageing rural population, agricultural production must concentrate on a smaller number of more productive farms. It is in this light that this report reviews recent policy developments to assess whether they have been conducive to productivity growth and environmental sustainability. It finds that the conditions for structural change and innovation at the farm level in China could be further improved by securing the long-term stability of land rights as well as reducing transaction costs. Greater policy coherence with agri-environmental policy objectives could also be achieved through stricter enforcement of environmental regulations. Finally, the agricultural innovation system could play a greater role by placing the focus on public agricultural R&D in areas such as the environment and resource conservation, and in other areas which do not attract much private sector investment.




Executive summary

The Chinese economy is experiencing a number of structural changes that also have a deep impact on the food and agricultural sector.The working age population started to decline in 2015 and the overall population is projected to peak in 2030. The population is expected to age rapidly over the coming decades. Rapidly increasing real wages since the early 2000s required the People’s Republic of China (hereafter “China”) to transform its growth model from one that relied on an ample supply of low wage labour from rural areas. The challenge is to shift from growth based on the mobilisation of labour and capital resources to growth based on enhancing productivity through innovation and sustainable use of natural resources, including in the food and agricultural sector.


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