The expansion of agricultural production in China has been remarkable, but at the
expense of the sustainable use of its natural resources. To counter this, as well
as to face problems due to rising labour costs and a rapidly ageing rural population,
agricultural production must concentrate on a smaller number of more productive farms.
It is in this light that this report reviews recent policy developments to assess
whether they have been conducive to productivity growth and environmental sustainability.
It finds that the conditions for structural change and innovation at the farm level
in China could be further improved by securing the long-term stability of land rights
as well as reducing transaction costs. Greater policy coherence with agri-environmental
policy objectives could also be achieved through stricter enforcement of environmental
regulations. Finally, the agricultural innovation system could play a greater role
by placing the focus on public agricultural R&D in areas such as the environment and
resource conservation, and in other areas which do not attract much private sector