3. Development policies

As can be implied from the previous chapters, aquaculture growth in China is almost exclusively a result of government policies. Non-policy factors played a very minor role, if any, in this development; they will not be discussed here.

Regarding policy, there are three main phases that characterize the Chinese aquaculture development. The first, which covers the period before 1949 and during which aquaculture development was slow, is poorly documented in terms of policies. The second phase, which runs from 1949 to 1978, is characterized by tight government control and policy prescriptions. It is a period of the traditional economic system whereby all decisions, including the three fundamental production related decisions, namely what to produce, how to produce and for whom to produce, are made by government policy-makers and planners. In this period, input from producers and consumers and market forces and signals were ignored in the production decision making process. This period can best be described as a period of highly centrally- planned economy policies. In the third period, from 1978 onwards, economic and policy reforms were established to allow producers to make production decisions, including marketing. This period can be referred to as a period of free market economy policies.

Regardless of the period in which these policies were developed, they were either established to guide the development of the sector as a whole, or to respond to specific issues such as that of seed, feed, appropriate production technology and investment, which were identified or perceived as impeding or capable of impeding the development of the sector. In this report, the first category of policies is referred to as general sector specific policies. The other category of policies is defined as issue specific policies. Both categories of policies are analysed in separate sections after a short discussion of the rationale for the Government intervention in aquaculture. In this analysis, emphasis is given to the last two decades where a dramatic development of the Chinese aquaculture occurred (see Box).

3.1 Rationale for the Government intervention in aquaculture

The rapid development of aquaculture in China in the last two decades can be traced to the enactment of appropriate policies. When the People’s Republic was born in 1949, the country had just emerged from the yoke of foreign domination and civil strife. Poverty was rampant. Food was scarce and famines were frequent and widespread. The economy was totally wrecked and undergoing reconstruction and recovery as the Government set out to rebuild the country.

The People’s Republic immediately set out to establish the guiding principles and general policies in meeting the urgent food needs of the people. Fisheries and aquaculture were considered two sources of animal protein that could be tapped in the shortest possible time, given their production cycles. Besides, fish was already an accepted item of food in the diet of the people and its production by farming and harvest from natural waters was well established in the country. Thus, Government support for fisheries and aquaculture through appropriate policy mix and investments was singled out by the new People’s Republic Government as a priority.

3.2 General sector specific policies

There are several critical general policies, which led to the noticeable development of aquaculture at different periods of time in the country that are useful as lessons for further study and possible adoption. There follows below is an analysis of what these policies were/are and how they helped to shape this development.

3.2.1 Self-reliance in fish through full employment of resources

With the proclamation of the People’s Republic of China in 1949, the Government developed a highly centralized system of planning, development and management that continued until the implementation of an open-door policy and economic reforms in the late 1970s. During this period, the Government maintained an inward-looking national policy, keeping external contact to the bare and necessary minimum. The Government’s policy was to push for full participation of its people in the economic life of the country including in the aquaculture sector. Full participation was mandatory from pre-harvest (production) activities to post-harvest primary handling and secondary processing activities (distribution and consumption). The primary goal was food self-reliance.

The results of this policy were the creation and accumulation of tangible assets and wealth, not only at the national level, but more significantly, also at the local and individual levels, especially by individual citizens. Rural incomes and rural livelihoods significantly improved. Besides aquaculture’s labour absorptive character and its provision of livelihoods for the people, full participation of the rural communities in aquaculture also developed the skilled aquaculture workers required to support the efficient development and expansion of the industry in the country.

3.2.2 Setting aquaculture as a priority in the development of the fishery sector

Before 1979, the guiding principles for fisheries and aquaculture in China emphasized marine fisheries and fishing. Freshwater fisheries and aquaculture were underrated, which led to the heavy destruction of fisheries resources and slow development of aquaculture. In 1979, the total output of marine and freshwater aquaculture was only 1 230 000 tonnes.

Two important instructions were initiated by the Government in 1979. These were the "Regulation on Breeding and Protection of Aquatic Resources", promulgated by the State Council on 10 February 1979. The second is the "Directive Notice on Approval and Implementation of the Report on National Aquatic Product Industry Working Conference", promulgated by the State Council on 29 April 1979. The principle of the "Regulation on Breeding and Protection of Aquatic Resources" was to protect aquatic resources. Through this regulation, fishing was restricted by area, time and species. To some extent, the protection of aquatic resources led to the development of aquaculture in the whole country.

The Directive Notice of the State Council first pointed out that to develop aquaculture was one of the main tasks for the fishery sector. It also defined the aim and set target of aquaculture development: aquaculture output should represent 40 percent of the total fishery output by 1985. Ways and means used to achieve the target were as follows:

• make full use of the available water areas to develop aquaculture and establish as many freshwater and marine aquaculture production bases as possible. These bases obtained the necessary support in the form of investment capital, equipment, feed and fertilizers from the central and local government;

• further expand the stable and high output fishponds in suburban areas and adopt integrated farming systems and cage culture systems wherever suitable areas exist. The investments required for fish culture in the suburban areas such as capital and equipment were provided by the city’s development programmes;

• encourage grass-root units to expand the water areas and mudflats suitable for aquaculture. These suitable coastal areas should be used for aquaculture, not only for fishing. Inland areas with suitable water bodies should be used for aquaculture by 1985.

The Central Government also encouraged Local Governments to implement its directives and instructions by taking into account different local condition and situation found in the area targeted for aquaculture. Guided by such general principles and policies, supplemented by other relevant or more specific policies, Chinese aquaculture development recovered from stagnation or standstill in no time and soon took off rapidly. By 1985, Chinese aquaculture output from freshwater and marine water reached 3 090 000 tonnes, accounting for about 43 percent of the total fishery output. The freshwater aquaculture output was 2 380 000 tonnes and marine water culture output 710 000 tonnes. From these experiences, it is clear that correct and timely policy intervention and necessary government support and assistance facilitated the rapid development of the industry in China.

3.2.3 Establishment of aquaculture production bases

The original aim in establishing aquaculture production bases was to ensure that the supply of fish would be able to meet the demand for fish. In other words, to produce enough fish from aquaculture to meet any shortages that may occur. Fish supply shortages can occur, especially in big cities or urban areas if only capture fisheries is relied on to supply the market. Supply from capture fisheries can be unpredictable, especially from marine waters. The second objective was to produce fish for exports to earn the much-needed foreign exchange for the country. The Changjiang Delta area and Zhujiang Delta are the traditional freshwater aquaculture production bases in China. Many other new freshwater aquaculture bases were formed after 1979 such as in Boyan Lake area in Jiaxi Province, Dongting Lake area in Hunan Province, Honghu Lake area and Liangzi Lake area in Hubei Province, Weishan Lake area and Dongping Lake area in Shangdong Province, Cao Lake area and Po Lake area in Anhui Province. Marine aquaculture production bases were also developed from small- to large-scale bases depending on the location. The larger bases are found in the bigger coastal counties.

Owing to the construction of these aquaculture production bases, aquaculture developed into an important industry for the rural economy. By 1986, the total farming areas of these aquaculture bases in China reached nearly 240 000 ha, of which the freshwater areas were 170 000 ha or 70.8 percent of the total area and marine water areas were 70 000 ha. The total aquaculture output from these aquaculture bases was 1 500 000 tonnes in 1986 or nearly 50 percent of the total aquaculture output.

3.2.4 Promotion of sustainable aquaculture development

Ten years after the promulgation of the "Instructions on the Release of Restrictions to Expedite the Development of the Aquatic Products Industry" was put into effect in 1986, the Chinese aquaculture industry had developed very rapidly. Freshwater aquaculture output exceeded 10 million tonnes in 1996 while marine aquaculture output exceeded 4.37 million tonnes.

While the socialistic market economy structure was being perfected gradually, the business environment for the aquaculture industry was changing. Many new problems and constraints for aquaculture development emerged. For example, the "Three Uncultivated Lands" (water surface, tidal flats, flooded land suitable for aquaculture) were not adequately cultivated. Poor management of aquatic seed resulted in high mortality; diseases broke out. Dissemination and transfer of aquaculture technologies were poor. Poorly constructed infrastructures and facilities were widespread.

To further foster and boost the sustainable and rapid development of aquaculture, the State Council issued another "Directive Notice on the Approval and Implementation of the Instruction of the Ministry of Agriculture to Further Expedite the Development of the Fishery Sector" in 1997. This Notice demanded further reform and liberalization of the market to further strengthen the development of aquaculture and a radical change of the structure of the fishery sector and approaches to promote the growth of the economy. It also requested that the species mix and production structure should be adjusted to market conditions and that new technologies should be put into wider practice as soon as possible to improve the performance of the whole fishery sector.

The Notice also set the following additional guidelines to further develop the sector:

1. Productivity improvement or higher output per unit of input will be the major effort to further develop the aquaculture sector. This can be achieved by improving the technology employed, promoting the use of high value species and by adjusting species mix or choice of the species cultured based on market condition;

2. Strong efforts shall be exerted to step up the greater and wider cultivation of the under- or unutilized "three uncultivated lands" (water surface, mudflat, flooded land suitable or fit for aquaculture) to make full use of the ‘cultivable’ aquatic lands;

3. Aquaculture licences for newly cultivated aquaculture lands can be given to local collectives or villages. These licences can be distributed to producers on a ‘production-by-production’ contract basis, rental basis or temporary lease transfer basis and even by auction;

4. The Chinese aquaculture industry should be further liberalized and market regulations enacted and enhanced to promote the large-scale development of the industry;

5. Aquaculture and the other agricultural industries should be equally developed in all possible regions of the country. Ecologically sound or ecosystem-based agriculture systems like integrated fish-livestock-silkworm-mulberry bush farming systems or fish culture in paddy fields should be actively promoted;

6. In regions where the incidence of poverty is high or where poverty is endemic, especially in the mid-west region of China that is rich in or well endowed with aquaculture resources aquaculture should be adopted not only as the source and means of livelihood and food security but also as the main engine to drive the economy of the region in the fight against poverty and malnutrition;

7. Enterprises, either public or private sector businesses engaged in aquaculture in the newly cultivated lands from the "three uncultivated lands" or in education or research in aquaculture such as in the production or development of aquatic seed and new species should be exempted from the agricultural special product taxes as an incentive;

8. Available fiscal support and other assistance from all levels of government for developing aquaculture should be kept and/or even increased, if necessary to promote aquaculture investments;

9. As aquaculture production bases in suburban areas are the main suppliers of aquatic products for the cities, the acquisition and requisition of land for aquaculture should be prioritized and conversely denied or disallowed if aquaculture land is being taken out of aquaculture for other non-aquaculture use unless such requisition is in the national interests or for the common good of all citizens in the area;

10. More investments should be made in the production of quality seed and fish health management to promote sustainable aquaculture development and management;

11. Aquaculture health management problems, in particular the treatment of fish diseases should be solved by the guiding principle of "prevention first, prevention and treatment combined" through the establishment of a network for fish disease protection at different levels throughout the whole country.

These guidelines and prescriptions for action under the new general policy for aquaculture illustrate the Government’s commitment to developing the sector in a sustainable way.

3.2.5 Continuous adjustments in the structure of the aquaculture sector

The Government’s policies and other timely intervention have greatly contributed to the rapid development of aquaculture in China in the past twenty years. However, as the industry developed it soon became apparent that there were serious inherent structural problems, which needed to be addressed if the industry was to grow further.

In the main aquaculture production areas, the supply of aquaculture products of some traditional species exceeded demand, which resulted in depressed prices. Aquaculture diseases broke out and spread rapidly. All these developments greatly affected the efficiency of the aquaculture industry and depressed producers’ incomes.

In response, in 1999, the Ministry of Agriculture released a new document called the "Guiding Instrument on Adjusting the Structure of the Fishery Sector" which was designated to restructure the fishery sector including aquaculture.

As far as aquaculture is concerned, the content/provisions of this Instrument can be summarized as follows.

The guiding rationale is that more effort will be made to develop new markets and/or expand existing ones, increase demand for fish through market promotion and develop new value-added products as well as improve the quality of aquatic products through technological innovation, provision of improved infrastructures and facilities and reform of the legal system.

The guiding principles of the structural reform of the sector are:

• promotion of open market operations by fostering the establishment of competitive marketing services, analysis of market demand and supply conditions and provision of market and price intelligence to producers and consumers alike to increase the efficiency of the aquaculture industry;

• to capitalize on favourable regional comparative advantages such as under-exploited natural resources endowment, growing and under-supplied markets and available advanced technology by investing in aquaculture development;

• greater reliance on technology to further strengthen the resilience and health of aquaculture through promoting technological innovation on aquatic seed quality and fish health management

• respect of farmers’ rights to make production decisions.

The fishery authorities at all levels should refrain from giving directives, unless necessary. Instead, the authorities should facilitate and formulate enabling and practicable policies and guidelines to speed up structural reform of the fishery sector, including providing information and setting up pilot farm to guide them.

The main constraint to aquaculture development in China is still the low supply and ready availability of quality seed at the place and time needed. Good quality seeds should be available wherever and whenever they are needed for stocking. As for species, the seed production of shrimp and crab is still low compared to shellfish and seaweed in marine aquaculture. For freshwater aquaculture, it is finfish seed. The second major constraint is that in some of the well-established aquaculture areas, the supply of the traditionally cultured species such as Chinese carps greatly exceeds the demand in the market, which pulled the prices down considerably. Also, the high value or market-preferred species, which are in demand in the domestic and international markets, are not fully exploited on a large scale. The third is that the farming systems are out-dated or behind time as far as the application of the latest modern technology or latest development in aquaculture technology. The latest scientific and technological advances are not widely applied in upgrading and improving the systems of production. As a result, the farming or production systems are not as efficient as they can. This implies that the costs of production of aquaculture products can be further reduced by improving its efficiency, thus making Chinese aquaculture products more competitive in the international markets. The fourth constraint is water pollution and frequent outbreaks of fish diseases. This constraint is becoming more serious and is rapidly spreading due to increasing water pollution. It is not only becoming a health hazard but also increases the cost of production.

To overcome these constraints, the Notice provides the following instructions:

1. Develop industrialized farming systems by improving the design and upgrading the systems of production employing the latest technology and selecting the best combination of species to be cultured based on market conditions prevailing in both the domestic and international markets.

2. For freshwater aquaculture, increase the market share and thus the proportion of production of the high value or high quality new species for culture as well as the species suitable for export. To increase its production and market or business efficiency, their production must be operated on a large-scale industrial basis. In parts of the country where poverty remains, the fishery sector, especially aquaculture production must be actively promoted as the main agriculture practice to increase the income of the rural people by developing paddy field fish culture and other integrated ecosystem-based aquatic production.

3. Greater attention must be given to the production of high quality seed, making use of modern biotechnology to select and breed high quality seed using, wherever appropriate imported high quality seed. At the same time, industrial-scale aquaculture farming systems can be developed, taking advantage or making full use of the different regional resources endowment and unique characteristics of the region.

4. Establish as soon as possible an integrated scientific system and network of fish breeding and seed production of high quality indigenous or endemic species as well as fish health management and disease prevention, diagnosis, control and treatment. This will ensure that quality seed and fish health clinical services will be available at the time and place they are needed by the farmers and other interested parties.

This Notice of Instruction is another important instrument for further development and growth of aquaculture in China. It aims to guide the development of aquaculture in a sustainable way in the new century and new millennium. It provides a sound planning framework of ‘causes and effects’ as well as the ‘ends-means’ relationships, highlighting the constraints and possible solutions to the problems identified.

3.2.6 Address specific policy needs through a specialized agency

To accelerate and manage the development of aquaculture in China, the Government, through the Fisheries Bureau of the Ministry of Agriculture, releases from time to time certain specific policies through its macro-guide notices. These notices focus on the critical or common issues faced in the whole country such as production of special species, details of farming systems or preferential treatments for aquaculture development. For example, in 1986 the State Council issued a notice known as the "Directive Notice on Developing Eel Production and Controlling the Export of Eel Seed" to ensure the sustainable use of the resources of Chinese eel. In 1998, the Fisheries Bureau issued another notice called the "Notice on the further Development of Padi Field Aquaculture" to promote padi field aquaculture. These special notices/instruments are issued to solve immediate or short-term critical problems and/or promote the development of aquaculture for a particular point in time or area. They constitute an important part of government policies and policy-making process, and play an important role and contribution in the overall development of aquaculture.

The chain of responsibilities is as follows. Through its general policies, the Central Government sets its goals in aquaculture development. Once the goals are set, Local Governments or other government agencies which have responsibilities in aquaculture turn the general policies into issue specific policies. That is, they make the Central Government’s policies operational and easy to implement. Over the past twenty years, the Government’s general policies/directives were the most important factor for aquaculture development in China.

3.2.7 Establishment of a good administrative framework for aquaculture management

The Fisheries Bureau is the functional department in the Ministry of Agriculture which deals with the administration of the fishery sector including aquaculture. Its main functions in aquaculture management are to:

• supervise the implementation of the state’s general principles, policies and plans for fishery sector;

• study and put forth measures for technological advances in fishery development;

• protect and rationally utilize fishery resources;

• promote fishery development;

• organize and supervise the construction of infrastructure in the fishery sector.

There are some other national government agencies that have direct or indirect responsibilities for regulating aquaculture. All their regulation efforts must be coordinated with the Fisheries Bureau of the Ministry of Agriculture.

There are also specific authorities of the province and county level who are responsible for the administration of the local fishery sector. Their work is carried out in accordance with the Central Government’s policies.

In practice, generally, the Fisheries Bureau studies and initiates the establishment of general policies and regulations. These are then submitted to the Ministry of Agriculture, the State Council, or the People’s Congress for approval. Once general policies and regulations are promulgated, the Fisheries Bureau supervises their implementation. The Bureau can also set up some specific policies according to its jurisdiction. The fishery authorities at the province level will initiate the implementation of the policies/regulations by themselves or after the approval of the provincial government depending on provinces.

3.2.8 Establishment of good supporting structures of aquaculture management

There are some other supporting structures for fishery sector as following: the National Fishery Technology Extension Station, the Chinese Fishery Academy and the China Society of Fisheries. The National Fishery Technology Extension Station is semi-governmental institution dealing with implementation of the state’s policies on fishery technology and extension services. The Chinese Fishery Academy is the national level academy involved in research on specific subjects such as the biology of aquatic animals, fishery resources and socio-economy of fisheries. The China Society of Fisheries is an organization of fishery technicians who deal with technical exchange and promotion.

3.2.9 Establishment of good legal and regulatory framework for aquaculture development

The Chinese Government always attaches great importance to the legal system for the fishery sector. The basic law in fisheries and aquaculture is "The fisheries law of People’s Republic of China" which was promulgated by the Standing Committee of the National People’s Congress in 1986, and was revised in 2000. It first set up the guiding principle in the fishery sector, which consists of simultaneously developing aquaculture, fishing, and processing, with special emphasis on aquaculture. It also regulated specially the for-not-fishing species, fishing areas, fishing methods and fishing periods. The goal was to protect the fishery resources.

Some regulations, rules, or directive notices are also important parts of the legal system regulating aquaculture development. All these provide safeguards for sustainable aquaculture development in China, taking account of the following points:

1. Protect fishery resources

After the "Regulation on breeding and protection of aquatic resources" was put into effect in 1979, several regulations or laws were promulgated for protection of the fishery resources. Besides the "The fisheries law of the People’s Republic of China" in 1986, there were the "Implement regulation on protection of aquatic wild animal", in 1993, on the protection and breeding of aquatic wild animal. In 1999, the Government established the policy of zero growth on fishing, enhanced policy of fishing ban period to protect fishery resources. To some extent these policies encouraged the farmers to take up aquaculture industry.

2. Provide access to water areas and management

Water areas and aquaculture lands in China are either state-owned or collective. Producers can get user rights through contracts. The laws providing user rights for water areas and lands are "The Agriculture law of the People’s Republic of China" and "The fisheries law of the People’s Republic of China".

Chapter II of the "Fisheries law" defines the provisions on water use. The following passages extracted from the chapter illustrate some of the important points on the use and access to water. In particular, Article 10 states: "The State encourages units owned by the whole people, units owned by the collective and individuals to make full use of water areas and tidal flats that are united to aquaculture department". Article 11: "The State makes unified plans for the use of water areas and designates water areas and tidal flats that can be used for aquaculture. Any unit and/or individual that wishes to use the water areas or tidal flats owned by the whole people and designated for aquaculture according to national plans shall apply to the administrative department for fisheries under the local people’s government at or above the county level. An aquaculture permit shall be issued after examination by the people’s government concerned, allowing the applicant to use certain water areas or tidal for aquaculture. Specific measures for examining and issuing aquaculture permits shall be formulated by the State Council. The water areas and tidal flats owned by the collective or by the whole people but used by agricultural collective economic organizations may be contracted out to individuals or collectives for aquaculture". Article 13: "Where a dispute arises between the parties over the use of the water areas or tidal flats designated for aquaculture according to national plans, it shall be handled in accordance with the procedures prescribed by relevant laws. Pending settlement of the dispute, no party to the dispute may disrupt aquacultural production".

Producers are provided the rights for the use and management of water areas or tidal flats. They can make decisions as to what and when to produce based on their knowledge of the market. These regulations greatly strengthened farmers’ confidence and encouraged investments in aquaculture.

3. Protect the environment

The rapid development of aquaculture caused some environmental problems. To reduce the impact on environment and ecosystem, the Government issued the "Water Standard for Fishery Sector" regulation. This was based on the principles stipulated in the "Environment Protection Law of the People’s Republic of China" and the "Water Pollution Prevention Law of the People’s Republic of China". Besides water pollution, the ecological impact resulting from the loss of genetic biodiversity as well as other environmental issues are also of concern to the Government and are dealt with under these regulations.

4. Control aquaculture production methods and practices

To maintain sustainable and healthy aquaculture, the Government put emphasis on monitoring aquaculture production practices including important factors of production such as seed and feed.

Fully aware of the importance and the dangers which can result from the abusive use of production inputs such as seed, feed, drugs and chemicals in aquaculture development, the Government enacted laws and regulations for their control. Thus, the production of seed must be approved by the fishery authorities above the county level. The import-export of seed must be approved by the fishery authorities by the State or Provincial government according to the provisions of the "Fisheries Law of the People’s Republic of China". To control seed production, a "National Committee on High Quality Original Seed" was created in 1991. Regulations were also passed as the "Administrative Rules on Aquatic Seed" in 1992 and as the "Administrative Rules on High Quality Original Aquatic Seed" in 1999.

In 1999, two documents, namely the "List and Usage of Pharmaceuticals that can be Used for Aquaculture" and the "List of Pharmaceuticals that cannot be Used for Aquaculture" were released by the Government to guide the use of drugs in aquaculture.

Feed for aquaculture is another important issue for aquaculture production. The "Administrative Rules on Feed and Feed Additives" issued by the Ministry of Agriculture in 2000 is the new regulation which governs feed production, including fish feed. Specific standards for the formulation and processing of fish feed were defined by the Government for inclusion into the Government regulations that guide the feed industry.

In 1999, the Government issued the "Regulation on Healthy and Safe Aquaculture Production", which will promote healthy and safe aquaculture practices in the country.

5. Aquatic food safety

In addition to the regulations on aquaculture drugs and feed use in the production of fish, special regulations on the processing of aquaculture products have also been issued by the Government. The aim was to control the business environment of the industry for the interest of the public. The "Administrative Rules on Aquatic Product Processing", which was issued by the Ministry of Agriculture in 1999, spells out detailed requirements for food safety and prevention of health hazards in the processing and packaging of aquatic products.

3.2.10 Emphasis on research, technological development and information dissemination

The rapid aquaculture development in the past two decades has been strongly backed by research, technology development, education, training and extension. Advances in and results of scientific research and field studies contributed to the rapid development of Chinese aquaculture on different accounts:

1. The genetics and ecological pools of 14 freshwater species of fish like the silver carp, big-head carp, grass carp, black carp, white bream and tilapia have been identified and catalogued since the 1980’s, including the cryo-preservation of their sperms.

2. Twenty-six fisheries stations stocked with wild and genetically selected fish species or varieties have been established throughout the country since the 1980s.

3. The use of multiploid breeding techniques in producing seeds of commercially important fish species like common carp, crucian carp, oyster, scallop and abalone has been widely adopted.^[10]

4. Production areas of many cultured fish species, both fresh and marine waters, have greatly increased since the 1980’s due to the increase in demand.

5. Availability of high quality artificially formulated feed greatly increased the productivity of Chinese fish farming.

6. The vast improvements made in the culture techniques and production facilities for intensive cultivation of marine fish and paddy-fish culture have also contributed to the higher output.

7. Fish health management was better understood and improved. More than 100 fish and 40 shrimp diseases were identified; the diagnosis and treatment of other aquatic pathogens were possible and effective vaccines for their prevention have been developed.

Recognizing science and technology as the most important drives of productivity, the Government has attached very high importance to aquaculture technological development since the economic reform and open-door policy initiated in the late 1970s. Examples of the technological development impact in aquaculture can be found in marine aquaculture. Expansion of Japanese kelp (L. japonica) production from a pre-l950 annual output of 40 tonnes (dry weight) in 1949 to 62 53.3 tonnes in 1958, or an increase of 155 times within nine years, was made possible by the introduction of artificial substrates in the construction of rafts for kelp growth. Before 1950, the Japanese kelp was cultivated on sea-bottom rocks. The method consists of throwing stones to the sea bottom or breaking submarine rocks to enhance kelp growth on natural substrate. Annual average output was estimated at about 40 tonnes (dry weight). With the introduction of artificial substrate (floating rafts) in 1950, the cultivation of kelp expanded quickly and output increased dramatically. In 1952, kelp cultivation by raft method produced 206 tonnes and 322 tonnes from the on sea-bottom rocks method. At the end of 1956, raft cultivation surpassed sea-bottom cultivation by 52 tonnes by producing about 320 tonnes against 168 tonnes from the former method. In 1958, there were approximately 5 267 tonnes produced by using the raft cultivation method and 986 tonnes produced by sea-bottom rocks culture method (15.8 percent of the total output). Since then, kelp cultivation on natural rocks on sea-bottom has been phased out as a method for commercial seaweed cultivation.

The modernization of the culture of the purple laver (P. tenera) was another breakthrough in the development of China’s mariculture production. For the last 200 years, the traditional cultivation of purple laver consisted of the rock cleansing method also called the Japanese pillar method. This method was improved by introducing a new technique known as semi-floating method. The combination of the pillar and the semi-floating methods, especially useful for intertidal cultivation, resulted in a significant increase in the purple laver output. The reproduction cycle of the purple laver remained poorly understood for a long time, which complicated its production. The scientific delineation of its life cycle solved the problem of the missing link, that is, the conchocelis stage, which produces the spores that give rise to the leafy stage of the purple laver. It was after solving these two problems that the mariculture of P. tenera became an established industry.

Before 1950, the culture of the Chinese shrimp (P. chinensis) was extensive. Seeds were obtained by trapping shrimp larvae from the wild and by growing them in enclosures; there was no feed distributed. The output obtained through this method was about 75 kg per hectare per year. It was only after 1979 when artificially produced shrimp seed and artificially formulated feed became available that shrimp culture took off and spread countrywide as a viable industry.

The contribution of scientific and technological progress to overall fisheries growth in 1999 was estimated at 48 percent, compared to about 28 percent 20 years before (Chinese Fisheries Yearbook, 2000). Experts agree that scientific research and technological progress contributed more than 50 percent to the growth of aquaculture output. The aspect of aquaculture research which contributed the most to aquaculture development is the mastery of breeding technologies for different culture species, which first succeeded with Chinese carps in late 1950s.

3.2.11 Promotion of high commercial value species

Before the 1970s, there were no feed manufacturers for aquatic animals in China; high animal protein diet for the cultured organisms was felt to be unnecessary. The main species were seaweeds and molluscs, for mariculture, and fish species like silver carp and big-head carp which are filter feeders, herbivorous or omnivorous, for freshwater aquaculture. In the event a protein diet was needed, trash fish was used as the main ingredient in the diet.

With the birth of shrimp (Penaeus spp.) culture in the late 1970s, the feed industry entered a primary phase. Farmers started to feed shrimp with home prepared feed. However, as they uncovered the high economic profitability of the shrimp farming industry, more and more farmers entered the business. The home-based feed processing model quickly failed to supply enough feed to meet the increasingly high demand for high quality feed. The increasing demand for high quality feed stimulated the development of Chinese fish feed industry. As already discussed, beginning in the late 1980s and early 1990s, new species both in fresh and brackishwater like the giant prawn (Macrobrachium rosenbergii), mitten crab (Eriocheir sinensis), soft-shelled turtle (Trionyx sinensis), eel (Anguilla spp), channel catfish (Clarias punctatus) and black large-mouth perch (Micropterus salmoides), flounder (Paralichthys olivaceus), red sea bream (Pagrosomus major), grouper (Epinephelus spp.) and turbot (Psetta maxima) began to be widely cultured. The need and demand for quality feed became obvious.

From then on, private large-scale fish feed manufacturers were established, covering about 50 percent of the market needs. Large feed mill companies are owned either by domestic or foreign corporations. Secondary industries such as fishmeal manufacturing, feed additives and fish processing machinery instantly developed in support of the feed industry. This was a result of Government policies to promote high value species for the much needed foreign currency.

3.3 Issue specific policies

3.3.1 Policies on feed issues

Seed availability in terms of quantity and more recently quality continues to be cited as a major constraint to aquaculture expansion. The need for high-quality seeds, especially strong, disease-free and disease-resistant seed is clear if aquaculture is to develop further.

The seeds of most farmed species, both in freshwater and marine come from hatcheries. The supply of fingerlings of freshwater fish for both indigenous species (carps and soft-shelled turtle) and exotic species (tilapia, channel catfish and large mouth perch) meets the demand of farmers. However, this is not yet so in marine aquaculture. The domestic technology in marine fish breeding is still inadequate, mainly because the number of farms does not economically justify greater private investments in such hatcheries. This gap is in spite of the progress made in marine fish fingerling production. In 2000, 1.3 billion fingerlings of the large yellow croaker were successfully produced. Similarly, the production of red drum, mullet and red sea bream seed has reached 10 million in 2000.

Realizing the crucial importance of high quality seed production in sustainable development of the aquaculture industry, the Government took the following steps:

1. Encouragement of private investment in hatcheries

Before 1978, nearly all hatcheries were in the Government’s hands. Currently, most are owned and operated by the private sector (individuals or families), cooperatives and corporations, although cooperative ownership is gradually changing into corporate ownership^[11]. Most of the investments are made in species with high commercial value and in high demand by the consuming public. These species are frequently new species which are not yet available in the Chinese market. They include a wide range of species from shellfish (scallop and abalone) to crustacean (Litopenaeus vannamei), from amphibians (American frog) to reptiles (turtle and crocodile) as well as from endangered (sturgeon) to exotic species (turbot). About 90 percent of the investors are private, some coming from abroad.

The productive capacity of these hatcheries is still low as most are small-scale. Large-scale ones can produce good quantities of seeds. For example, one abalone hatchery and farm in Guangdong can produce 15-20 million seeds and 300 tonnes of edible abalone annually.

All the other breeding stations and bases are State-owned. Their operations are financed from Government funds and income from selling seeds.

2. Seed quality control policy

The Government established the China National Fish Protogenic and Fine Seed Certification Committee in 1991. A great deal of work was accomplished in the field of for fish seed production and quality management. This includes the development of fish seed management methods, identification of key sites for the construction of freshwater fish protogenic and good quality seed farms, and development of protogenic and good quality fish seed certification methods and standards. From 1991 to 1995, the Government approved the construction of 26 protogenic and good quality seed farms. In 1997, the construction of an additional 40 of such farms was also approved. So far, 61 farms of this type have been established by the Government.

Since 1991, several national quality standards for fish species such as black carp, grass carp, bighead carp, Nile tilapia have been formulated and published. Seed quality standards for other species are also being formulated. As of December 2001, the China National Fish Protogenic and Fine Seed Certification Committee has examined and certified 40 species for aquaculture.

The Government also created other committees at the province level. For example, in Shandong Province, the largest aquaculture producer in China, an Identification Committee of Aquatic Breeding was established in 1999. The task of this Committee is to carry out broodstock selection and other breeding work to select or breed fish with good economic characteristics. The Committee has so far issued the "Identification Methods of Well-Bred Aquatic Organisms of Shandong Province" and the "Approval Method of Aquatic Breeding Station of Shandong Province". From then on, nine stations for the selection and production of well-bred aquatic species were constructed. The species selected and bred include the Chinese shrimp (P. chinensis), scallop (Chlamys farreri), flounder (Paralichthys olivaceus), turbot (Scophthalmus maximus), kelp (Laminaria japonica) and others. They were identified and passed the genetic selection examination. In general, the programme on the identification of well-bred species and establishment of breeding stations has been strengthened and improved since the ninth "Five-Year Plan". They will be further strengthened in the tenth "Five-Year Plan".

3. Establishment of legal provisions on seed production and propagation

The Government encouraged and supported, by law, the production and dissemination of good quality seeds. An example is the 1986 "Fisheries Law of the People’s Republic of China" which was amended in October 2000. In its Chapter 2, articles 16 and 17, the Law says: Article 16: "The State encourages and supports seed selection, breeding and propagation of fine varieties of aquatic species. The propagation of new varieties of aquatic species shall be subject to verification by the National Verification Commission for Pedigree and Fine Varieties of Aquatic Species and approval by the administrative department for fisheries under the State Council. The import and export of fry and fingerling of aquatic animals shall be subject to examination and approval by the administrative department under the State Council or such departments under the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government. The production of fry and fingerling of aquatic animals shall be subject to examination and approval by the administrative departments under the people’s governments at or above the county level, except where fishery workers breed fry and fingerling of aquatic animals for their own use".

Article 17: "The fry and fingerling of aquatic animals for import or export shall undergo quarantine in order to prevent the spread of diseases in or out of the territory. Quarantine shall be conducted in accordance with the quarantine laws and administrative regulations concerning the entry and exit animal and plant quarantine. Introduction of transgenic fry and fingerling of aquatic animals shall undergo safety evaluation, the concrete administrative work shall be undertaken in accordance with the relevant regulations of the State Council".

The goal of these measures is to ensure that fish seed production and distribution in the future are conducted in a more orderly manner.

3.3.2 Policies dealing with feed issues

Support research in feeds and nutrition

Feed and seed are most important material inputs in aquaculture. As aquaculture develops, feed will become an increasingly important factor affecting the productivity, economic and ecological efficiency of the farming practice. Traditional practice of aquaculture is based on polyculture of carp species in China. In traditional practice, natural feed and locally available cheap raw materials (mostly by-products of grain processing and oil extraction) were commonly used feed. As aquaculture develops, culture intensity increases and new species of cultured animal are introduced. Natural feed and traditionally used raw feed materials cannot meet the production requirement.

Starting in early 1980s, the Government has attached high importance to the development and application of formulated pellet feed in China. The Government first supported the research on the nutritional requirements of major cultured species. It provided very strong base for the development of well-balanced formulated feed of the species later. Use of locally easily available cheap ingredients for formulated aquaculture feed is highly encouraged by the government. It was also important to reduce the cost of the formulated feed as the major species cultured are low priced commodities in China. Formulated feed for major cultured species such as grass carp, common carp, tilapia and Chinese bream were developed following the two principles, cheap in cost and meeting the general nutritional requirements of the animal.

Because of the introduction of some new and high valued species in aquaculture, high quality formulated feed, feed premix and additives were also developed. The goal was to improve the nutritional value of the feed in order to meet the special requirement of the introduced species.

In the past, China used to import large quantities of high quality feed for high value species such as eel and shrimp. Most of this feed is now locally developed and produced. It is gradually replacing the imported feeds, which reduced the reliance on imported feed and production costs.

Establishment of a regulatory framework for the feed industry

In May 1984, the State Council promulgated the "1984-2000 Outline of China’s Feed Industry Development". From then on, the construction of feed mills and development of the Chinese feed industry was brought into the national economic and social development plan, leading to the rapid development of the industry. By the end of 1999, China’s total annual output of compound feed reached 55.52 million tonnes, of which about 5 million tonnes are fish feed.

Recently, the Government started paying attention to the quality of feed used in aquaculture. It has set feed standards for some important species such as carps, tilapia, trout and eel. Most of these standards were formulated in 1997. Some of them are: "Nutritional Standard of Formulated Feed for Common Carp, SC/T 1026-1997" for common carp, "Nutritional Standard of Formulated Feed for Grass Carp, SC/T 1024-1997" for grass carp, "Nutritional Standard of Formulated Feed for Tilapia, SC/T 1025-1997" for tilapia, "Technical Criteria in Rainbow Trout Culture-Formulated Pellet Feed for Rainbow trout, SC/T 1030-1997.7" for rainbow trout and "Formulated Feed for Japanese Eel, SC 1004-1992" for eel.

In 1999, the State Council promulgated the "Regulation on Feed and Feed Additives Management". The regulation has since provided a legal framework for the feed industry. The main clauses include procedures for the approval and publication of new feeds and new feed additives; first time registration of imported feeds and feed additives; production licensing for feed additives and additive premixes; system of approval code for feed additives and additive premixes; production records and retained sample observation system for feeds and feed additives; labelling; quality monitoring and legal responsibilities. The "China National Feed Management Office" within the Ministry of Agriculture is the Government authority responsible for the management and guidance of the Chinese feed industry.

Provide economic incentives to investors in the feed industry

As the aquaculture industry expands quickly at home, large quantities of some feed ingredients, mainly fishmeal and soybean, are imported. To promote development of the aquaculture feed industry, relatively low tariffs are levied on the major imported raw materials. For example, in 1999, import tariffs for fishmeal intended for aquatic animal feed were only 3 percent in 1999 (Table 22), compared to 30 percent for fishmeal intended for human consumption. Similarly, import duties for soybean meal used for feed production were 40 percent, compared to 114 percent for soybean imported for other uses.

TABLE 22
Import duties on some feed ingredients in China in 1999

Source of data: www.chinavista.com/database/.

Preferential import duties on important protein sources of feed have had very important impacts. They positively affected the availability and quality of feed for aquaculture as well as for animal husbandry

Currently, there are over 360 large and medium scale aquaculture feed production companies with an annual production capacity of 2.7 million tonnes. There is also a large number of small fish feed mills. The total quantity of formulated aquaculture feed used is around 5 million tonnes annually. There is still a lot of work to be done to increase availability of high quality feed in aquaculture for long-term sustainable development of the aquaculture industry in the country.

3.3.3 Policies dealing with appropriate technologies

The following policies were used by the Government to solve issues of appropriate technologies.

Develop appropriate technologies for different environmental conditions

Aquaculture is an industry that strongly relies on natural resources and environmental conditions. It is also very much related to social and cultural backgrounds. Therefore, developing and adopting appropriate technologies is vitally important to the development of the industry. China is a vast country with great variation of geographic and climatic conditions. There are also significant differences in the economic development and social and cultural background across the country. It is especially important to develop and adopt appropriate aquaculture technologies under different environmental conditions.

Fully considering the great variations on different aspects across the country, the Chinese Government has been continuously applying a multi-technology policy in the development of aquaculture in the country. Thus, national research institutions are distributed across the country based on the climatic and geographic zones. Of the five freshwater fisheries research institutions, one is located in the subtropics, one is located in the area close to frigid zones, one is located in the central eastern part of the country, the other two are located in the inner western part of the country. The three marine fisheries research institutes are also evenly distributed from the south to north along the coast of the country.

Different research institutions have developed broad varieties of aquaculture technologies for different regions. These technologies can fully utilize the local natural resource and fit to local conditions. For instance, pond culture technologies are better suited for the cold climate in the northern part of the country; pen culture technologies were developed for shallow lakes; cage culture is better adapted to reservoirs and other relatively deeper open waters; common carp and some cold water species are the major culture species for cage culture in northern part of the country whereas, different fish species for cage culture are used in the southern part of the country.

Promote diversification of animal species in aquaculture

Due to differences in socio-economic development and cultural traditions, preferences of consumers vary greatly across the country. Thus, the Government strongly promotes the diversification of species used in aquaculture. About twenty years ago, species used for freshwater aquaculture were merely carp species, around 10 species altogether. Currently, commonly cultured freshwater species have exceeded 30 species, which include not only finfish, but also crustaceans, amphibians and other species. In the past 20 years, the Government invested important amounts of money to develop culture and breeding technologies for new indigenous species. The Government has also been promoting the introduction of exotic species with good potential for culture in the country. There is a regular programme set up in 1994 to especially support the introduction of exotic species. Introduction of exotic species contributed to the production significantly in the recent years. Tilapia, Malaysian giant freshwater prawn and European eel are the best examples.

Introduction of foreign technologies

While developing aquaculture technology locally, the Chinese Government also attaches high importance to introduction of foreign technologies for the need of aquaculture in China. Cage culture and pen culture technologies were introduced to China in late 1970s and early 1980s respectively. It significantly promoted the aquaculture in inland water bodies. Indoor circulating system and deep-sea cage have been introduced to China to improve marine aquaculture, especially finfish culture. China is a developing country. High-technology enclosed running water systems do not suit the present situation in most parts of the country. However, the Government has been supporting research and development of such a system in order to meet future needs. The Government is also investing in the establishment, for demonstration purposes, of farms equipped with advanced running water culture systems.

Encourage private investment in technology development

The role of private sector in the culture technology development was not significant in the past, except in aquaculture feed technology development. The Government has called upon this sector to contribute more in technological development. As a result, an increasing number of private enterprises are entering aquaculture sector and many large-scale private fish farms are being established in China. The private sector might play a more important role in aquaculture technology development, especially in the areas such as breeding of high valued species and enclosed running water systems. There are already some private aquaculture research institutes in China.

3.3.4 Policies dealing with marketing issues

Breaking the State’s market monopoly

The Chinese open-market economic reform policies are the most important factors that contributed to the rapid development of aquaculture in China. Under the centralized planning economic structure before 1978, aquatic products, like agricultural and industrial products, were bought and distributed by the Government. The State had the monopoly in purchases and marketing of any product. This policy of socialized system of production greatly slowed down farmers’ incentive to expand aquaculture production.

From 1979, the Government began to reform the marketing system for aquatic products by gradually opening the markets. The production, marketing and distribution of Chinese aquatic products has been drastically liberalized and privatized. Under the reforms, the market monopoly by State enterprises was broken. Many small private traders, cooperative companies and fishermen cooperatives became directly involved in the wholesale and retail markets. Trade barriers between regions were abolished; aquaculture products could be distributed all over the country.

Creating enabling environment for market development

To further develop the fisheries and aquaculture in the country, a new policy based on open market mechanisms was promulgated by the State Council in 1985. This new policy is the ‘Instructions on the ease of restrictions to expedite the development of the aquatic product industry’. Some highlights of this policy, including its instructions are given below:

About buying and selling: aquatic products were put under the Third Category of agricultural products. Under the new open market planning economic system, agricultural products were divided into three categories. Products under the first Category such as grain, cotton, cooking oil were under the control of the Government, including buying and selling. Products under the second Category were under the control of the industry authorities. Products under the third Category, including aquatic products, were open to the market. This implies that prices of aquatic products would be determined by market forces.

About the marketing system. under the new system, suppliers and buyers are the main players in the market. Competition in buying and selling by the State, cooperative trade enterprises and qualified private merchants are encouraged and promoted. Producers can sell as much as they wish and where they feel like (without any regional restrictions). In the beginning, the State-owned trade enterprises should be active in balancing the supply and demand in the market.

The management system of State-owned enterprises of aquatic products was also reformed. It would gradually be divested from the Government to become an independent business entity over time.

The Chinese aquatic products industry was the first to open its market in comparison to the other agriculture industries. This new Instruction was one of the milestones for aquaculture development as it provided a new market environment and mechanisms for aquaculture development. According to official statistics, the marine aquaculture output in 1987 reached 1 100 600 tonnes and freshwater aquaculture output reached 3 484 100 tonnes.

Currently, the Central Government intervenes in the market through enabling policies. The goal is to influence open market dynamics as well as to create and set criteria for the construction, design, organization and management support of wholesale markets. In addition, provinces have established offices responsible for the management of fish products distribution channels and the promotion of local wholesale market development.

In 1995, the Central Government formulated the ‘National Development Plan for Aquatic Products Wholesale Markets’. The Plan has since been brought under the "National Wholesale Market Development Plan". By the end of 1998, 323 fish wholesale markets had been established, of which 150 are in urban areas and 173 in rural areas. This is in contrast to 1993 when the number of registered fish wholesale markets was only 150. In addition, the Central Government has also set up State-designated central wholesale fish markets in the major fish production areas and major fish consumption and distributing centres. By the end of 1999, 18 fish wholesale markets were designated as State central wholesale markets.

In 1996, the Ministry of Agriculture together with the State Industry and Commerce Administration jointly issued the “Method on the Management of Aquatic Products Wholesale Markets” in order to ensure that transactions in the markets are conducted in a sound ethical manner. Many provinces, such as Guangdong, Jiangsu and Shandong, have also formulated appropriate regulations on the implementation of the “Method on the Management of Aquatic Products Wholesale Markets”.

Furthermore, a “Seafood Market Information Network” was established in 1993 under the joint control of the Fishery Bureau and Information Centre of the Ministry of Agriculture and the Chinese Fishery Distribution and Processing Association. This Network, with over 60 partners, collects information from various markets and disseminates them to the public through the Internet, China Central Television and by other means.

Some local Fishery Authorities have also established "Fish Market Information Centres" to provide the necessary data in guiding Company decision makers in their planning of fishery production.

3.3.5 Land issue policies: structural reforms of farm ownership and property rights

Since the early 1980s, the Government encouraged and supported the transfer of farm ownership from the public to the private sector. This policy relies on the creation of more fish farm owners instead of just wage earners on fish farms. This is a new form of economic organization. In contrast to the former collective system where ownership and benefits accruing from farming belonged to the States and/or collectives, under the new form of economic organization, the reformed socialistic principle of collective economy, property rights, particularly the ownership and individual rights to the produce from the farm are guaranteed and given to collective members. That is, each member has equal right to the farm and gets a share of the value of the produce (farm income).

This new form of economic organization has three characteristics: it combines and unleashes the contribution of labour with ownership rights and therefore economic gains; collective members benefit both from their labour contribution and ownership share in the fish farms; the vote of the collective members under the new form of economic organization is of two types: membership right and ownership right. This new form of economic organization is becoming increasingly popular in the fishery sector. Most State or Province-owned fish farms were transferred to individual contractors.

This land reform positively affected the development of aquaculture in the country. For example, the Hubei Province, whose aquaculture production was not significant in the past, is today the largest producer of freshwater fish in China, producing 2.18 million tonnes in 1998. The recent extension of the initial contract period to 30 years has also positively affected aquaculture development.

3.3.6 Investment issue policies

Before 1979, government enterprises were the norm. Thereafter, a part of the productive capital has been changed from allocation by the Government to government loans. The Government also provided grants and subsidies to investors, introduced a tax system whereby the tax burden on investments was shared between the Central and Local Governments, and encouraged joint ventures between the Central and Local Governments, on the one hand, and domestic and foreign private investors on the other hand.