Remarks by Angel Gurría, OECD Secretary-General
Beijing, 21 March 2009, 15h00-16h15
Ladies and gentlemen,
It is a great pleasure to be in Beijing to present the first OECD Rural Policy Review of China. These difficult times have exposed the paramount importance of our structural challenges; the relevance of our structural policies.
The importance of the rural world seems to have vanished behind the haze of uncertainty that this grave global crisis has raised. But the relevance of rural development is still there. In fact, it is more important than ever. The vast economic potential of the rural world opens a unique opportunity to help to reactivate our economies.
Most of this potential is still waiting to be tapped. Both OECD and non-OECD countries can transform their rural areas into dynamic engines for economic growth and sustainable development. There is a lot we can learn from each other and the OECD is working to promote this mutual learning.
The Rural Policy Review of China
The OECD Rural Policy Review of China was done in collaboration with the Development Research Center of the State Council (DRC). It makes a general assessment of rural areas and it suggests policy options to advance comprehensive rural development in China.
We hope that its assessments and recommendations reflect the growing added value of the ever closer relationship between China and OECD, providing ideas and enriching the national debate to help you develop this crucial sector.
China is still a predominantly rural country with over 700 million people living in the countryside. This is nearly twice the size of the rural population in all OECD countries. Agriculture remains the main source of rural income, but its share in total income fell from 66% in the mid-1980s to 42% in 2006, while the share of wages from industry and migrants' remittances more than doubled.
China has made remarkable progress in raising the standards of living of its rural population over the past generation. Using Chinese data, the number of people living below the poverty line in rural areas declined from 250 million in 1978 to 21 million in 2006 and rural households' income increased almost five-fold between 1980 and 2007.
But this progress may now be under threat. The global financial and economic crisis is impacting the rural economy: many migrants are going back from cities to rural areas and will be looking for jobs. And rural families who depended on the money sent back by the migrants will now see a big drop in income. Some academic studies have estimated that families with migrants have seen their incomes increase by as much as 13 per cent, and now these families will feel the impact of the slowdown.
It may be difficult for Chinese agriculture to sustainably reabsorb many of these returning migrants, so alternative employment in a more diversified rural economy will be needed.
Going beyond agriculture
This is exactly the topic of the review: how to build a more diversified rural economy; how can China further stimulate economic activity and overall socioeconomic development in rural areas.
Rural China represents an important resource for balanced national development and growth and the OECD has a long experience in advising countries on issues related to rural development, on how to strengthen the significant and often untapped potential of rural areas.
China's current rural development strategy and related reforms are sound and innovative. A stronger focus on territorial imbalances has brought increased public expenditure for rural areas, particularly in agriculture, infrastructure and public services. Also, a comprehensive rural tax and fee reform succeeded in reducing farmers' fiscal burdens.
We are happy to see that the Chinese economic stimulus package to address the current crisis contains a significant regional and rural policy component. Because this crisis opens important opportunities for rural areas.
To make the most of our rural sectors, it is important to look beyond agriculture for a sustainable and diversified rural economy. OECD can help you go further in building such a comprehensive approach to rural development. Economic diversification aims at supporting rural enterprises and other emerging economic sectors such as rural tourism, renewable energy production, and high value-added traditional products.
Many OECD countries have developed innovative approaches in this area. Agro-tourism, for example, plays a strategic role in some regions, as it couples competitiveness and sustainability. In Italy, there are almost 20 000 farms with a guesthouse. The region of Tuscany alone hosts almost 2 million tourists a year in these farms.
Other rural regions have diversified their rural economies while promoting environmental sustainability through renewable energies. Spain for example, invested a lot in wind power. The region of Navarra produces more than 45% of its electricity from wind, and an additional 15% from other renewable sources. The wind power machinery manufacturing sector currently provides work for many thousands in the region.
The crucial role of public services
OECD research and policy experience shows that, besides investments in physical infrastructure, it is important to further enhance the provision of rural public services, particularly education, health care and social security. In China, as in many other countries, some rural areas still don’t have access to basic services such as clean drinking water and safe sanitation. In deciding where and how to invest in public services, local feedback and knowledge are very important, so consultations between levels of government and with the private sector are necessary.
Ireland has a successful experience in this area. The Irish Western Development Commission has an investment fund that supports the provision of services and infrastructure such as social housing, enterprise space or childcare and elder care facilities. The design and delivery of these services are done in consultation with local authorities and with the participation of the private sector. Over 1500 jobs have been sustained and created in rural SMEs and social enterprises.
Also crucial are measures to improve the skills of the workforce and enhance the provision of business and financial services. This includes the support for entrepreneurship and small and medium-sized enterprises. To assist rural areas in generating their own entrepreneurs, the government of Quebec, Canada, financed locally designed policy ideas. The aim is to ask rural communities to determine their own comparative advantage, set out a policy action and engage in its implementation. To date, the policy has leveraged 3 dollars for each dollar invested, triggering the creation of various businesses which mirror their region's characteristics and have good development potential.
Finally, to realise the full potential of rural areas, we need to pay special attention to issues of governance, the relation between the national, regional and local levels and rural citizens' participation. In many countries, the central level plays a strong, more formal co-ordination role to ensure cross-sectoral co-ordination. This can take many forms, from co-ordination mechanisms defined by law, to the creation of an integrated ministry, and to "rural proofing" mechanisms. This is the example of the United Kingdom, where policies are checked for their impact on rural areas.
Ladies and gentlemen:
"Rural" is not synonymous with "decline". In more than 30% of OECD countries, the region with the highest rate of employment creation was a rural region. Experience across OECD countries, as well as many success cases and policy experiments in China, show that appropriate policy responses to rural areas' challenges can help to increasingly turn the countryside into a source of balanced national development and growth.
One of the main tools to address this economic crisis is actually rural policy. Sustainable rural development is one of the most effective ways to produce stronger, fairer and cleaner economies; especially in countries like China where the rural sector has such a prominent role.
It is therefore highly important that we keep cooperating to turn our rural sectors from peripheral vulnerable areas to central engines of “green growth”. We may have different histories and different cultures but that doesn’t mean that we cannot help each other. The continuous co-operation between DRC and OECD on rural and regional development is a source of shared knowledge and certainty based on a fundamental recognition: that we are interdependent.
So, as the classic Chinese saying reads: Let’s put our heads together for the benefit of all.
I want to thank Dr. Han, the DRC and the Government of Scotland, UK for the important support received on this project and express my wishes to continue building on our successful co-operation.
Thank you very much.