Since the beginning of the economic reform initiated in late 1978, China's economy has been growing substantially. The annual growth rate of China's GDP reached 8.5% in the early reform period (1979-84, Table 1). The growth rate accelerated over time and reached nearly 10% in the latter part of the reform period.
Successful transformation of China's economy is based on economic growth in the agricultural sector. Agriculture has made important, but declining contributions to national economic development in terms of gross value added, employment, capital accumulation, urban welfare and foreign exchange earnings. Before 1980, agriculture contributed more than 30% of GDP and half of export earnings. Contribution from agriculture fell below 20% of GDP by the early 1990s (Table 2). Agriculture employed 81% of labour in 1970, but only 50% in 1998. The role of agriculture as a whole in international trade has declined sharply (Table 2).
The declining importance of agriculture is historically common to all developing economies. China is densely populated; farm sizes have been averaging less than 1 ha since the 1950s. Population growth and limited land resources will shift China's comparative advantage from land-intensive economic activities like agriculture to labour-intensive manufacturing and industrial activities (Anderson, 1990).
The decline of agriculture is accompanied by structural adjustments within the sector. Cropping used to be the dominant sub-sector within agriculture. It contributed 80% of the gross value of agricultural output in 1978 and 75.6% in 1980. By 1997, its contribution had fallen to 56.4%. In contrast, the share of aquatic output rose more than five times from only 1.7% in 1980 to 9.3% by 1997 (Table 3). For various agricultural sub-sectors, the growth in aquatic production was the highest during the same period (Table 4). Indeed, growth of the fishery sector has accelerated over time since the reform was initiated.
2.1 Growth of aquaculture production
Steady growth of grain production is at the core of China's food security policy. Increased aquatic supply serves the purpose of improving food quality. The fishery sector has been benefiting from early market reforms and price liberalizations. It was considered a less risky element in the nation's food security system providing a non-strategic food commodity. Fishery's over-achievement will have important policy implications in the future for other sub-sectors, such as crops and oil crops, which are still highly regulated.
Abolition of collectivization, price increases, and relaxation of trade restrictions on most agricultural products enabled China's food economy to take off (1978-84). Crop, forestry, livestock and aquatic productions all had decent growth rates, expanding annually in terms of real value by 7.1%, 8.8%, 9% and 7.9% respectively. It was during the period from 1978-84 that aquaculture started to drastically outpace production from fish capture, posting growth rates from about even in 1970-1978, to triple in 1979-1984, in terms of output quantity (Table 4).
The shift from the collective production-team system to the household responsibility system brought gains in efficiency that were phenomenal, yet may soon be exhausted, if further reforms are not forthcoming. Agricultural production decelerated in the decade after the mid-1980s (Table 4). The decline was most pronounced for grains and oil crops, sectors in which prices and markets are still highly regulated. Growth rates of fishery products, however, continued to increase in response to rising demand and market and price liberalizations (Table 4).
Figures in Table 5 and Appendix 1 present growth rates of aquatic production categorized by marine and freshwater and by capture and culture. The results show that aquatic production in all categories has increased over time. Total aquatic production reached 36 million t by 1997, about eight times more than the amount produced in 1980, when the fishery market was liberalized. The data confirm an average annual growth rate of more than 10% over the reported period.
Past studies demonstrated that a number of factors contributed simultaneously to growth in agriculture as well as in aquaculture, during the reform period. Earliest empirical efforts focused on contributions from the household responsibility system (McMillan et al., 1989; Fan, 1991; Lin, 1992). These studies concluded that increased productivity was mostly a result of institutional innovations, particularly of the rural household responsibility system that restored the primacy of the individual household in place of the collective production-team system as the basic unit of production and management in rural China.
Recent studies have shown that technological change has become the primary engine for agricultural growth since the completion of the household responsibility system reform in 1984 (Huang and Rozelle, 1996; and Huang et al., 1996). This is particularly true for aquaculture. Success in artificial propagation of fries of prawn and freshwater fishes has been vital to the emergence of the sector. Technological progress has the following components: (i) development of artificial propagation technology for fish, shrimp and crabs, (ii) development of high-yield technology in fish-pond culture, (iii) development of techniques for fencing cultures and protection of propagation of fish in lakes, (iv) adoption of net-boxing technology in reservoir fish culture, (v) successful breeding and crossbreeding of some high-value species and introduction of exotic species, (vi) development of multiple-ingredient feeds and their commercialization, (vii) disease control, (viii) development of fishery science.
The enormous progress in technology of aquaculture is shown in Table 6. For example, the average yield of products from aquaculture rose from 489 kg/ha in 1981 to 780 kg/ha in 1985, an increase of about 60% within four years, accounting for about two-thirds of the growth of production in aquaculture during that period (Appendix 1). Yield-growth continued to accelerate after the mid-1980s. Yield of aquatic products doubled in the period from 1985-90, and nearly doubled again from 1990-95 (Table 6). Yields from both marine and freshwater aquaculture enjoyed remarkable growth, but more progress was achieved in the freshwater sector. Over the last two decades, yield from freshwater aquaculture increased nearly seven times (Table 6).
Price and marketing liberalization policies have greatly influenced the growth of aquatic production. Favourable output to input price ratios contributed to the rapid growth of aquaculture in both the early and the late reform periods. Gradually increasing prices for products from aquaculture (Table 7) added incentives for higher aquatic production. Area under aquaculture expanded from 3 million ha in 1981 to nearly 4 million ha in 1985, and to over 5 million ha by the mid-1990s (Table 8). With expansion of both yield and area, total aquaculture output reached 20.3 million t, a fifteen-fold increase from 1980 (Table 5).
2.2 Changing production patterns
The rising aquaculture sector has significantly changed production patterns of the capture and culture fisheries. Production from capture fisheries accounted for 80-90% of total production in the 1950s. It fell to 76-80% in the 1960s and remained at about 75% of total production in the 1970s (Table 9 and Appendixes 1 and 2). With the rapid expansion of aquaculture since 1979, when the reform was first introduced, the share of products from capture fisheries has declined rapidly over the past two decades. Production fell from 70.1% in 1980 to 43.7% of total fishery production by 1997 (Table 9). Production from capture fisheries is dominated by marine cultures (88% in 1997, Appendix 1).
While most increases in aquaculture have occurred in freshwater aquaculture, marine aquaculture has a much higher growth rate. Area share of freshwater aquaculture declined from more than 90% in the 1970s to less than 90% in the late 1990s (Table 8). By 1997, freshwater aquaculture accounted for 89% of the total culture area, and marine aquaculture accounted for 11%. Because of the much higher yield of marine aquaculture (more capital - and more labour-intensive than freshwater aquaculture), its share amounted to 39% of total production from aquaculture in 1997.
Geographically, the northern part of China (comprising China's north, northeast and northwest) has increasingly become an important region for aquaculture production over the last two decades (Table 10 and Appendix 3). Nevertheless, production from China's most important regions for aquaculture, the eastern, central and southern parts of the country, amounted to 86% of freshwater production (Table 10). Eastern China alone produced 42% of the nation's aquatic products from freshwater in 1997 and has become the fastest growing region in the past two decades (Table 10 and Appendix 3).
While these statistics are impressive, we have serious doubts as to their accuracy. One reason is that statistics of total production are based on the official data presented above and are not consistent with the household consumption and expenditure data of our survey. Per caput production should match per caput consumption. Currently, per caput production is more than twice the level of per caput consumption. Normally, consumption away from home is not recorded in the household consumption and expenditure survey. Therefore, official figures on per caput consumption are likely to be under-estimated. A preliminary result from a recent household food consumption survey, conducted by the Centre for Chinese Agricultural Policy, reveals that under-estimation of fishery product consumption is about 20%. Annual aquatic production is probably half of the reported level, if we take into account the over-estimation of production and under-estimation of consumption. Nevertheless, if we assume that the production data have been over-estimated by a factor of two since 1980, production of aquatic products increased more than four times in 1980-97, posting an average annual growth of 8.5% for the period.
It should be noted that the biophysical potential for growth in aquaculture is still far from being exhausted. If demand keeps growing as income rises, higher prices will continue to induce an economically viable expansion of the aquaculture sector in the coming years. Twenty-seven percent of inland watersheds, and 60% shallow-sea and sea-beach areas are still undeveloped. Among China's 17.3 million ha of paddy fields, very few have been used for fishery purposes. The 3 million ha of saline areas and lowlands suitable for fishery purposes are barely developed (Zhao, 1998).
On the other hand, productivity of water areas can still be improved, given the large discrepancy in production levels that exists between regions. In 1996, the national average per hectare yield was 4 097 kg, while it was 6 664 kg in Guandong Province. Continued efforts to improve seedlings and technology to control feed and diseases will result in rising productivity (Zhao, 1998).
