Madam Zhang Yuxiang, Chief Economist, Ministry of Agriculture
Distinguished resource persons and participants
Ladies and Gentlemen
A pleasant good morning to all of you!
On behalf of the FAO Director-General, Jacques Diouf, and on my behalf, I would like to welcome you to the Policy Forum on Agricultural Reforms and Trade Liberalization in China and Selected Asian Countries: Lessons of Three Decades.
We are delighted to organize this policy forum in partnership with the Agriculture Trade Promotion Centre of the Ministry of Agriculture, China. First of all, I thank the Director General of the Agriculture Trade Promotion Centre for his initiative, encouragement and constant support.
This policy forum is significant as it is taking place at a time when the world economy is experiencing unprecedented crises. These started with high oil prices, followed by food shortages, financial meltdown and threat of economic recession. These challenges are compounded by climate change and environmental degradation. Indeed, the global economic landscape has changed so much in recent years that our conventional thinking may not provide answers. We must rethink our strategies and action plans.
I cannot imagine better timing for this policy forum. The year 2008 marked three decades of Chinese economic reforms. This is an occasion to reflect on our achievements and prospects. My generation grew up in this development period and I personally witnessed the many successes and failures. The timing is also opportune as we in FAO recall the 1975 study mission to China to learn about approaches to agricultural and rural development resulting in a widely circulated publication, Learning from China. Three decades later, we decided to come here and learn from you again.
The Chinese record of poverty alleviation and improving food security is unparalleled. Achieving close to 9 percent annual growth rate for three decades is outstanding. This economic miracle has truly benefitted the grass roots community and enabled millions of the poor to escape from poverty. We are cognizant of the fact that only 11 percent of total land in China is cultivable. To be able to feed 20 percent of the world’s population with such limited natural resources is truly admirable.
Turning to this region, Asia has become more dynamic and has the potential to become the economic powerhouse of the world. Asia has also seen significant poverty reduction, freeing more than 350 million people from extreme poverty in the past decade and a half. During this period, the proportion of people living on less than $1 a day in the region fell from 31 to 17 percent. Moreover, the absolute number of poor people fell from 1,009 million to 641 million despite fairly rapid population growth.
Such outstanding achievements notwithstanding, countries face increasing vulnerability to external shocks. The world economy is facing the threat of recession. The International Monetary Fund has forecast 0.5 percent growth for 2009, the lowest since the Second World War. Another source of vulnerability to hunger and malnutrition is emerging. Fifty one million people are projected by the International Labour Organization to lose their jobs. Asia and the Pacific region is bound to suffer from the global economic downturn due to reduced demand for its exports. As a result, the GDP projections for 2009 for most Asian economies have been revised downwards significantly. In addition, reduced inflow of foreign direct investment, remittances from workers abroad and the earnings from tourism will adversely affect household income.
At this moment, China has taken the lead in mitigating the effects of the current global financial crisis. It has decided on a four trillion Yuan stimulus package for domestic development over two years focusing on employment and income generation, especially in rural areas. Other countries such as Malaysia and Thailand have also announced stimulus packages in recent weeks.
We value the commitment of the Chinese leadership towards bold and courageous reforms aiming at reconstructing for a modern agricultural sector. The success of further policy reforms in China as well as in other Asian countries will critically depend on the adaptability of the countries to a variety of new challenges emerging from the recent food and financial crises. It will also depend on the extent to which reforms are grounded on a sound understanding on the country contexts and principles. This could be achieved through developing a deeper understanding of the social, economic and political milieu, the sequencing of policy interventions and institutional apparatus.
We know that challenges for China and the rest of Asia are formidable. Farming is increasingly being undertaken by the aged, women and children. Natural disasters occur more frequently with greater impact – an example of which is the severe drought in seven major winter wheat producing provinces of Northern and Western China affecting 9.5 million hectares of winter wheat or 44 percent of total area planted. The potentially affected output amounts to about 10 percent of China’s total annual cereal production. Market competition will be fierce in the impending economic slowdown. The need for improved product quality is increasingly urgent. Land, water resources and bio-diversity are under tremendous strain. Rural-urban and agricultural-industrial transformations create social and political strains. As never before, we must satisfy the need for strong social safety nets. These are hard problems to solve, but I am sure we can make a contribution by analyzing the issues more deeply and creating a knowledge base.
In this difficult time, the agriculture sector has a crucial role to play in preventing people from falling into the poverty and hunger trap. If the experience during the Asian financial crisis in 1997 is any guide, large numbers of people losing employment in the organized sector in urban areas and in foreign countries are expected to return to their homes and farms in the villages of Asia. The agriculture sector will face the challenge of gainfully absorbing this added work force.
What should be our response? This Forum’s review of the reform processes that changed the economic landscape of China, India and many other countries in Asia is the first step. It should be done with a view to learn from the experience of agricultural reforms; and to facilitate discussions on how reforms can be further strengthened. The present challenges further validate FAOs long standing assertion that countries need to invest in agriculture and rural development. We need to commit ourselves to undertake in-depth studies and disseminate the knowledge so gained. In this task there is the need for a partnership with the media, civil society, research institutions, universities, and international organizations.
Thank you very much. I wish you a very productive and fruitful policy forum.