As China's cities embrace capitalism, farmers remain locked in

DAGAOKOU, China -- China's government insists it is serious about lifting farmers' incomes to narrow the rich-poor divide. If that's true, the villagers of Dagaokou have some ideas.

"If I could, I'd invest my own money in improving the land," says wheat farmer Wang Yuqi. "The better the land, the higher the quality of your crops, and the more money you can make."

But while Wang has the capital, he lacks the right to make changes in the land he farms because he doesn't own it. China's ruling communists banned land ownership when they took power 54 years ago promising to liberate millions of peasants from the tyranny of landlords.

Collective farming remains a tenet of communist rule even as China's cities surge toward a capitalist future. While incomes have soared among cellphone-toting urban residents, farmers are still allotted land-use rights according to family size, and many still plow the earth by hand.

But with most Chinese making their living from farming, and the rural-urban gap growing, alarm bells are ringing in Beijing. At their annual legislative meeting in early March, China's leaders set the goal of raising farm incomes as a top priority.

Farming is the foundation of Chinese society, Premier Wen Jiabao said as he pledged to eliminate farm taxes within five years and subsidize grain output.

He said the tax rollback would save farmers $580 million annually and the grain subsidies would amount to $1.2 billion this year.

Farmers in Dagaokou said they already stopped paying taxes last year, and few had heard of the planned grain subsidies.

"Would the subsidies be on top of the government's protective buying price? The market price for grain has been going up anyway," said Wang You'en, the village's Communist Party secretary.

"Twenty years ago, everyone just grew grain," he said. "In the 1980s, we started diversifying. Relying only on agriculture is no way to lift incomes."

Per capita income in the countryside hovers around $315 a year, while in the cities it has climbed to $1,015.

Farther afield from Beijing, farmers have fewer opportunities to supplement their incomes from side jobs. In western desert regions, farmers still live hand-to-mouth, as they have for centuries. More than 100 million peasants migrate to cities each year for jobs in construction and industry, returning home once a year, if at all.

In Dagaokou, 70 miles northeast of Beijing, farmers also engage in home businesses -- buying and selling goods with other villages or doing piecework like making artificial flowers. Others work in construction or drive taxis for about $1,200 a year.

"People who have abilities do something else. People with no abilities do farming," says Wang Yuqi, the wheat farmer.

He makes out all right, though. As neighbors abandon agriculture, he farms the land allotted to 50 peasants -- about 12 acres. He farms some of it under contract with the village collective and some under informal agreements with his neighbors.

He grows wheat, corn and soybeans, and earns about $2,400 a year -- more than double his income a decade ago.

"If I could, I'd make the land really good," he says, waving a hand toward the neat rows of winter wheat. "I'd raise output. I'd put in straight irrigation canals. You could say this is my hope."

Most people in Dagaokou keep a hand in farming, even if to a much lesser extent than Wang. Down the lane, the extended Shi family -- three brothers and their families plus their parents -- can count wages from doing construction work, raising pigs and sheep and making fake flowers.

Growing grain isn't profitable on their 3 1/2-acre plot, says the 71-year-old family patriarch, Shi Delian.

"After you pay for water and fertilizer, you have no money left," Shi says.

His youngest son, Shi Bingyu, makes $1,200 a year from a combination of pig farming and a county job maintaining electrical lines.

"As long as the amount of land doesn't change, farm incomes can't change," the younger Shi says. "If I only did agriculture, I wouldn't even have enough money to send my children to school."

His 16-year-old daughter is about to graduate from middle school. "If she doesn't test well enough to go to high school she can find a job around here," he says. "But of course I want her to go to high school and then to university."

Wang Yiming is vice chairman of the All-China Federation of Industry and Commerce, which won Communist Party backing for a constitutional amendment to protect private property rights for the first time since the 1949 revolution. But he doesn't see farmers owning their land soon.

"The land system is a complicated issue," he said. "Any constitutional change must wait until the time is right and the majority in society recognizes the need for it."