12

Rural transformation in the developing world and China’s strategic role: A cross-country comparative perspective

Moyu Chen, Xianneng Ai, Aizhao Wang and Yu Sheng

Over the past 50 years, China has made significant strides in rural revitalisation, particularly achieving a pivotal phase in rural transformation. According to the Food and Agriculture Organization of the United Nations (FAO 2024), China’s agricultural labour productivity has risen significantly, from an average of US$10,000 in 1970 to more than US$13,000 in 2022—a growth rate that surpasses that of other developing regions in Asia, Latin America and Africa. Concurrently, there has been a marked shift in employment from agriculture to non-agricultural sectors; China’s off-farm employment increased from 20 per cent in 1970 to approximately 80 per cent in 2022, indicating a key structural change necessary for rural modernisation (FAO 2024). This transformation has improved living standards in rural communities and strengthened the nation’s economic growth and food security.

The success of China’s rural development is largely due to strategic market-oriented reforms and well-designed institutional, policy and investment measures. Since the 1990s, China has rapidly reformed its agricultural sector, becoming a leader among developing countries with minimal agricultural support relative to GDP. Coupled with domestic reforms, China’s gradual opening of its agricultural markets to international trade has further stimulated growth. Meanwhile, dual market and government adjustment mechanisms have become crucial for stabilising rural and structural transformation processes. The government’s role in building agricultural infrastructure has been essential, especially in a context in which small-scale farming is prevalent, ensuring that market mechanisms are effectively supported and rural transformation is stabilised, leading to a robust and productive agricultural sector.

Despite its significant strides, China’s rural revitalisation is now facing formidable challenges due to environmental and resource constraints. Climate change, as highlighted by the United Nations (UN Statistics Division 2023), impacts more than one-third of the global population, particularly in regions such as Asia, where water stress exceeds 75 per cent. This, coupled with the degradation of natural resources—for example, about 33 per cent of the world’s soils are moderately to severely degraded—and the deterioration of more than 60 per cent of irrigated land in critical regions such as North Africa, South Asia and the Middle East, underscores the urgency of these obstacles. Additionally, ecological shifts, such as the loss of nearly 130 million hectares of agricultural land from 2000 to 2019 and the annual contamination of water bodies with nearly 600,000 tonnes of phosphorus from agricultural runoff, compound the issue. These multifaceted environmental pressures demand a strategic reassessment and adaptation of rural development approaches.

In response to these challenges, China has charted a new course for rural transformation and revitalisation, prioritising the enhancement of ‘new quality’ agricultural productivity. This innovative approach transcends conventional metrics of output and efficiency by embracing the principles of inclusivity and environmental sustainability. By integrating these core values, China is adopting advanced agricultural technologies—encompassing biotechnology, digital technologies and artificial intelligence (AI)—to increase agricultural productivity while considering ecological preservation. This approach seeks not only to augment current productivity but also to mitigate natural resource degradation and environmental pollution, thereby laying a foundation for sustainable agricultural practices that can endure for future generations. More importantly, especially for the rural sector predominantly comprising small-scale farmers, it ensures that the benefits of agricultural advancement are broadly shared across society.

This chapter delves into the evolution of rural revitalisation in China, examining its strategic role within the broader context of the developing world. It offers a comparative cross-country perspective by using data from authoritative sources such as the FAO’s database (FAOSTAT),¹ the US Department of Agriculture’s International Agricultural Productivity database (IAP)² and the National Bureau of Statistics of China (NBS).³ By examining these trajectories, we seek to extract valuable lessons and insights that can benefit other developing countries in their quest to transform and revitalise their rural sectors. Ultimately, the goal is to provide a comprehensive overview that not only highlights China’s journey but also offers a roadmap for sustainable and inclusive rural development applicable to diverse global contexts.

The chapter is structured as follows. The first section outlines the motivation behind China’s rural revitalisation and its importance in the context of developing countries. The second section examines the main drivers of China’s rural transformation. The third section discusses the new challenges faced by China in its rural revitalisation efforts. Section four delves into new directions for China’s rural transformation, focusing on inclusiveness, fairness and sustainability, while the conclusion synthesises the key findings and their implications for other developing countries.

Rural transformation pathways in China and their significance for developing countries

Rural development and revitalisation often hinge on rural transformation, as revealed by an examination of various countries’ trajectories. The International Fund for Agricultural Development (IFAD) defines rural transformation as a process intricately linked to the ongoing enhancement of agricultural labour productivity, a shift in agricultural production from low-value food crops to more commercially viable high-value agricultural products and a notable increase in non-agricultural employment and entrepreneurial opportunities (IFAD 2016). This process is also characterised by structural transformation, with the national economy transitioning from an agriculture-centric to an industry and service–oriented model. These transformations are interdependent and collectively pivotal for the advancement and modernisation of rural regions.

Economic studies initially primarily focused on examining the rural transformation triggered by the Industrial Revolution. This transformation was pivotal in shaping the trajectory of agricultural modernisation and its broader implications for national economies (Johnston 1970; Schultz 1964). Over the past two centuries, there has been a notable shift in global agricultural practices from extensive to intensive methods. This shift has been driven by the growing demand for food due to rising populations and urbanisation, occurring within the constraints of limited resources (Boserup 1976). The progression from extensive to intensive agricultural practices has been a critical response to the challenges posed by population growth and urbanisation, demonstrating the adaptability and resilience of the agricultural sector in the face of evolving global demands. Stable agricultural development is vital for ensuring global food security and is especially crucial for countries that rely heavily on agriculture (Block 1994; Dethier and Effenberger 2012). According to the World Bank (2023), the total value of global agricultural output has tripled since the mid-twentieth century. This trend is particularly pronounced among developing countries, with agricultural output in lower middle-income Asia-Pacific nations increasing more than sixfold (Alston and Pardey 2014; Block 1994).

Global rural development faces core challenges, including food security, rural income generation and the pursuit of sustainable agricultural practices, which have recently drawn considerable attention. In response to these challenges, the UN Sustainable Development Goals promote the development and implementation of targeted solutions by developing countries, customised to their unique sociocultural and economic contexts (UNDESA 2015). These solutions aim to curb rural decline, alleviate poverty and improve residents’ quality of life. The World Development Report highlights the critical role of rural transformation as a primary growth driver, particularly for economies with a strong agricultural base (Byerlee et al. 2008). This transformation is evident in the sizeable changes occurring in rural areas across Asia, Africa and Latin America, where economic and social shifts underscore the importance of strategic rural development in driving broader socioeconomic progress (IFAD 2016).

Theoretically, rural and structural transformation unfold through several developmental phases, each with distinct characteristics. IFAD (2016) divides this process into five evolutionary stages: starting with an agriculture-dominated phase, it advances through early industrialisation, service sector expansion, urbanisation and modernisation and, finally, matures into a knowledge and innovation economy. Each stage is a pivotal moment in the journey, reflecting profound shifts in the economic and social landscape of rural areas.

Nevertheless, it is evident that rural and structural transformations do not follow a one-size-fits-all pattern. As a notable example, China has exemplified successful rural transformation through an accelerated developmental trajectory. Over the past four decades, China has experienced rapid growth in per capita agricultural income and has released a significant agricultural labour force through increased agricultural productivity. This has led to a swift increase in the proportion of non-agricultural employment, achieving structural transformation alongside rural transformation. Nevertheless, not all nations have successfully navigated through the stages of rural transformation. For instance, in sub-Saharan Africa, postcolonial GDP growth has not significantly alleviated poverty and agricultural productivity growth remains subdued (Barrett et al. 2017; Wuyts and Kilama 2015).

To encapsulate the income and marketisation of the agricultural sector, we characterise rural transformation in developing countries by agricultural labour productivity and the share of high-value commodities. Figure 12.1 shows that, over the past 50 years, there has been substantial progress in agricultural labour productivity among developing countries. In Asia, agricultural labour productivity has shown an overall upward trend, with an increase from an average of US$5,000 in 1970 to more than US$9,000 in 2022 (constant 2015 prices), indicating ongoing advancements in agricultural transformation and output. Latin American developing countries have seen a growth pattern similar to that of Asian developing countries, with agricultural labour productivity rising from US$5,000 in 1970 to more than US$15,000 in 2022. Conversely, African developing countries confront challenges of both low agricultural labour productivity and slow growth rates. Despite improvements, Africa’s per capita agricultural GDP remained below US$5,000 in 2022, reflecting a slower pace of development than other regions.

Figure 12.1: Trend of agricultural labour productivity in China and other developing regions, 1970–2022

Sources: Authors’ own estimations based on the ERS (www.ers.usda.gov/data-products/international-agricultural-productivity/); and NBS database (data.stats.gov.cn/english/).

Compared with other developing countries, China has exhibited accelerated growth in agricultural labour productivity. From 1970 to 2004, agricultural labour productivity in China fluctuated around US$1,000 to US$2,000. Since 2005, the growth rate has accelerated significantly with the advancement of market reforms and increased trade openness in China, rising from US$2,000 to more than US$10,000. Between 1997 and 2020, China’s growth rate surpassed that of other Asian and Latin American countries. However, after 2020, there was a slowdown.

Between 1970 and 2020, the proportion of high-value agricultural products among developing countries grew, with significant regional variations (Figure 12.2). In Asia, the share of high-value agricultural products increased from about 55 per cent in 1970 to nearly 70 per cent by 2020, indicating phased progress in agricultural production reform. In contrast, Latin America had a higher initial share, of more than 60 per cent, in 1970, growing slowly to nearly 70 per cent by 2020. Meanwhile, African countries mainly produced low-value food crops and, although the share of high-value products increased, it did not exceed 50 per cent overall.

As the same time, China’s growth rate of high-value agricultural products significantly outpaced other developing countries. Initially, China’s agricultural production focused on low-value food crops. However, government and market efforts shifted production towards higher-value crops. By 1990, China’s share of high-value agricultural output reached 40 per cent, surpassing the average level of African developing countries. By 2000, this proportion increased to more than 60 per cent, nearing the average level of Asia and Latin America. Over the next two decades, China’s share of high-value agricultural products fluctuated slightly but showed a general upward trend.

Figure 12.2: Trend of the share of high-value agricultural products in China and other developing regions, 1970–2022

Sources: Authors’ own estimations based on FAOSTAT (www.fao.org/faostat/en/#home); and NBS database (data.stats.gov.cn/english/).

With rural transformation, developing countries are also experiencing rapid structural changes, highlighted by the growing importance of non-agricultural GDP and off-farm employment. As shown in Figure 12.3, the proportion of non-agricultural GDP in developing countries has a significant upward trend, reflecting urbanisation and industrialisation advancements. Latin America had the highest proportion, starting at 90 per cent in 1970 and stabilising around 95 per cent between 2010 and 2020. In Asia, the proportion grew rapidly, from about 65 per cent in 1970 to 90 per cent by 2020, surpassing the world average by 2000. This trend shows Asia’s progress in rural poverty reduction and structural transformation. In contrast, Africa is still in the early stages of structural transformation, facing obstacles in non-agricultural industry development. In 1970, African countries had just over 70 per cent non-agricultural GDP, which slowly increased to 80 per cent by 2020.

China has achieved significant success in developing its non-agricultural sector, with growth rates far exceeding those of other developing countries. In 1970, China’s non-agricultural GDP share was just over 30 per cent—lower than other developing countries. However, over the past five decades, this share grew rapidly, reaching 80 per cent by 2000, surpassing Africa’s average. By 2010, it exceeded the average level in Asia, approaching Latin American levels. This trend reflects China’s substantial progress in non-agricultural industry development and structural transformation.

Figure 12.3: Trend in the share of non-agricultural GDP in China and other developing regions, 1970–2022

Sources: Authors’ estimations based on FAOSTAT (www.fao.org/faostat/en/#home); and NBS database (data.stats.gov.cn/english/).

In terms of off-farm employment, developing countries in different regions have shown positive growth trends, reflecting the ongoing release of rural labour from farm employment and deepening global rural structural transformation. In Latin America, the share of off-farm employment was as high as 40 per cent in 1970 and grew to about 60 per cent by 2022 (as shown in Figure 12.4). In Asia, the share increased continuously from about 35 per cent in 1970 to nearly 50 per cent in 2022. Africa also experienced a pronounced change in employment structure, but the share of off-farm employment is still lower than in other regions. Starting from a lower base at 20 per cent, the share of off-farm employment in African developing countries just exceeded 40 per cent by 2022, reflecting the fact that African countries are still in an important stage of economic structural adjustment.

The growth rate of China’s share of off-farm employment has been even faster. Despite starting from a lower level, by the end of the sample period, China’s proportion exceeded the average level in other developing countries. In sync with rural transformation, China’s share of off-farm employment increased from about 20 per cent in 1970 to about 70 per cent in 2022, representing nearly a 2.5-fold increase. By the early twenty-first century, China’s share had reached 50 per cent, surpassing the average in other developing countries. This continuously adjusting employment structure reflects the rapid progress of urbanisation and structural transformation alongside rural transformation in China.

Figure 12.4: Trend in the share of non-agricultural employment in China and other developing regions, 1970–2022

Sources: Authors’ estimations based on FAOSTAT (www.fao.org/faostat/en/#home); ERS (www.ers.usda.gov/data-products/international-agricultural-productivity/); and NBS database (data.stats.gov.cn/english/).

The drivers of China’s rural transformation

Rural transformation and structural adjustment represent a gradual evolution towards marketisation, where the agricultural sector has shifted from government leadership to market mechanisms. From the end of the last century to the present, the total amount of agricultural support in most developing countries has shown an initial increase followed by a decrease, with its proportion in GDP generally declining, reflecting the decreasing relative importance of agricultural support in the national economy.

Table 12.1 shows a global comparison of government agricultural support in developing countries. In Latin America, the total value of agricultural support was US$8.9 billion between 2000 and 2009, constituting 0.47 per cent of GDP. This decreased to US$6.9 billion between 2010 and 2019, with the proportion of GDP slightly increasing to 0.54 per cent, and further reduced to US$4.4 billion between 2020 and 2023, with the GDP share dropping to 0.41 per cent. In Asia, the total amount of agricultural support was US$14.9 billion between 2000 and 2009, representing 0.75 per cent of GDP. This increased to US$17.1 billion between 2010 and 2019, with the GDP share slightly decreasing to 0.68 per cent, and significantly dropped, to US$13.9 billion, between 2020 and 2023, with the GDP share reduced to 0.59 per cent.

Table 12.1: Agricultural support in China and other developing countries

Region	Agricultural support (US$ million, constant 2015 price)	% of GDP
Panel A: 2000–09
China	8,205.05	0.16
Africa	258.00	1.12
Latin America and the Caribbean	892.07	0.47
Asia	1,491.94	0.75
Panel B: 2010–19
China	13,787.12	0.13
Africa	274.17	0.86
Latin America and the Caribbean	694.34	0.54
Asia	1,713.30	0.68
Panel C: 2020–23
China	8,273.99	0.05
Africa	297.02	0.76
Latin America and the Caribbean	436.67	0.41
Asia	1,389.94	0.59

Note: The level of agricultural support and its GDP ratio in the table pertain solely to mainland China, which is excluded from the ‘Asia’ sample.

Sources: Authors’ estimations based on FAOSTAT (www.fao.org/faostat/en/#home); World Bank (data.worldbank.org/); and NBS database (data.stats.gov.cn/english/).

In contrast, Africa’s agricultural sector continues to increase its reliance on public policy, with sustained growth in the total amount of agricultural support and a proportion of GDP significantly higher than in other developing regions. The total value of government agricultural support in Africa was US$2.6 billion between 2000 and 2009, accounting for 1.12 per cent of GDP. It slightly increased, to US$2.7 billion, between 2010 and 2019, with the GDP share reducing to 0.86 per cent, and further increased, to US$3 billion, between 2020 and 2023, constituting 0.76 per cent of GDP.

Since the 1990s, China’s agricultural sector has undergone rapid marketisation reforms, making it one of the developing countries with the lowest agricultural support as a proportion of GDP. In China, the level of total agricultural support was about US$8.21 billion between 2000 and 2009, accounting for 0.16 per cent of GDP. From 2010 to 2019, the total increased to US$13.79 billion, while its proportion of GDP declined to 0.13 per cent. Between 2020 and 2023, the total decreased to US$8.27 billion, with its share of GDP reduced, to 0.05 per cent.

Figure 12.5: Trend of tariff rate changes in China and other developing regions, 1990–2022

Sources: Authors’ compilation based on the World Bank (data.worldbank.org/); WTO Stats (stats.wto.org/); and NBS database (data.stats.gov.cn/english/).

In addition to domestic market reforms, China has gradually opened its market for agricultural products to the world. The acceleration of globalisation in the 1990s and the establishment of the World Trade Organization (WTO), along with the impetus of the Doha Round of negotiations in the twenty-first century, have led to a gradual reduction in tariffs and an expansion of market access for agricultural products in developing countries. As shown in Figure 12.5, there was a rapid decline in tariffs in developing countries in the 1990s and a generally downward trend has been maintained in the twenty-first century. Starting in 1996, China reduced its tariffs below the average level of developing countries in Asia, Africa and Latin America, and has since maintained a long-term continuous decline.

Consequently, the reduction in tariffs has promoted international trade and market access for agricultural products from China, enabling these products to enter the international market at a lower cost, thereby increasing export opportunities and competitiveness. At the same time, the domestic market may face more intense competition due to the entry of foreign agricultural products, prompting domestic agricultural producers to improve their efficiency and product quality. Although there may be short-term pressure on some agricultural sectors that depend on protection, in the long run, reducing tariffs is beneficial for enhancing the competitiveness and sustainable development capacity of the entire agricultural sector. This ultimately supports the transition to a more mature stage of rural and structural transformation (Gale 2013; Orden et al. 2003).

However, given the vulnerability of the agricultural and rural sectors in developing countries, relying solely on market adjustment mechanisms for rural and structural transformation is challenging. For example, to ensure food security and meet the basic nutritional needs of a growing population, these regions initially formed production models centred on staple foods such as rice, wheat and corn. This food production–dominated model limited the development of non-agricultural employment, resulting in a concentration of rural labour in agriculture, a single rural development model and generally low incomes dependent mainly on agricultural output (Huang 2020; IFAD 2016). Therefore, governments in various developing countries continuously formulate and adjust institutions, policies (such as technology policy and market reforms) and investments to complement market mechanisms and facilitate smooth rural transformation.

In China, dual market and government adjustment mechanisms have become crucial for stabilising rural and structural transformation processes. The agricultural production model dominated by small farmers makes spontaneous market adjustment difficult for constructing agricultural and rural infrastructure. Consequently, the government has long undertaken the construction of agricultural production infrastructure. Public investment in infrastructure and R&D, due to their significant positive external effects on agricultural production, has been a central focus of rural public investment by the central and local governments in China since the period of reform and opening.

The long-term investment by China’s public sector in irrigation infrastructure is a typical and effective strategy for improving the efficiency of the agricultural sector and promoting rural transformation. Since the 1970s, China’s investment in irrigation infrastructure has expanded significantly, enhancing agricultural production and achieving stable and increased output. From 1970 to 2022, the proportion of irrigated land in China’s total arable land increased from less than 20 per cent to more than 50 per cent—far exceeding the average level of developing countries in Asia, Latin America and Africa (as shown in Figure 12.6). By the end of 2022, China’s effective irrigated land area was 70.4 million hectares (Wang et al. 2017). The continuous improvement of irrigation infrastructure has become crucial for ensuring food security, with irrigated agriculture supporting more than 70 per cent of China’s grain crops, more than 80 per cent of its cotton and more than 90 per cent of its vegetable production (Wang et al. 2017).

x

Figure 12.6: Trend of changes in the scale of irrigation infrastructure in China and other developing regions, 1970–2022

Note: The level of irrigation is measured by the proportion of irrigated land in the total area of farmland.

Sources: Authors’ estimations based on the ERS (www.ers.usda.gov/data-products/international-agricultural-productivity/); and NBS database (data.stats.gov.cn/english/).

In addition to domestic market reforms, China has gradually opened its market for agricultural products to the world. The acceleration of globalisation in the 1990s and the establishment of the World Trade Organization (WTO), along with the impetus of the Doha Round of negotiations in the twenty-first century, have led to a gradual reduction in tariffs and an expansion of market access for agricultural products in developing countries. As shown in Figure 12.5, there was a rapid decline in tariffs in developing countries in the 1990s and a generally downward trend has been maintained in the twenty-first century. Starting in 1996, China reduced its tariffs below the average level of developing countries in Asia, Africa and Latin America, and has since maintained a long-term continuous decline.

However, the positive impacts of irrigation infrastructure on rural transformation have diminished over time (Sheng et al. 2024). Specifically, from 1980 to 1985, a 1 per cent increase in irrigation infrastructure boosted agricultural productivity by 0.3 per cent; from 2012 to 2018, this impact declined to 0.2 per cent. This trend aligns with the historical development of irrigation infrastructure. In the early 1980s, irrigation construction significantly optimised rural resource allocation and aided adjustment of agricultural structure, enhancing productivity. In the late 1990s, with a solid foundation of irrigation infrastructure, government policies and institutional innovations further accelerated productivity growth. Entering the twenty-first century, the focus on green, efficient and sustainable agricultural development has introduced new requirements for transforming irrigation investment, presenting fresh challenges for productivity growth. Therefore, economic benefits should not be the sole criterion for evaluating rural revitalisation. In promoting dual circulation and sustainable development, the establishment of inclusive and fair sustainable rural development measurement indicators is urgently needed.

New directions in China’s rural transformation: Inclusiveness, fairness and sustainability

Climate change, natural resource degradation and ecological alterations have become significant factors constraining rural development due to their adverse impacts on the agricultural sector. Rapid global urbanisation leads to a continuous decrease in the amount of agricultural land and intensifies demand for water resources for agriculture. Long-term reliance on input-intensive strategies, such as the excessive use of chemical fertilisers and pesticides, has caused severe environmental pollution in agricultural production. This creates a ‘double constraint’ of tightening resource constraints and overloading the environmental carrying capacity, hindering sustainable agricultural development.

The challenges posed by climate change and resource degradation are even more severe for developing countries with large populations and limited cropland. The UN Statistics Division (2023) noted that, in 2020, more than one-third of the world’s population lived in countries experiencing water stress, with more than 75 per cent of those in Central and South Asia facing high water stress, and North Africa exceeding 100 per cent. Approximately 33 per cent of soil globally shows moderate to severe degradation and, in North Africa, South and West Asia and the Middle East, more than 60 per cent of irrigated land has been degraded. The impacts of water and soil resource shortages and pollution from pesticides and chemical fertilisers are expanding; globally, the amount of agricultural land decreased by nearly 130 million hectares between 2000 and 2019, with up to 1.5 million hectares of cropland rendered unproductive annually due to soil salinisation (FAO 2021). Furthermore, nearly 600,000 tonnes of phosphorus enters water bodies annually from agricultural production, and a survey of 11 European countries found that nearly 60 per cent of agricultural topsoil contains multiple persistent pesticide residues (FAO 2018, 2021). Climate change also significantly impacts agricultural development, with the Food Security Information Network (FSIN and GNAFC 2024) reporting that nearly one-third of 59 countries (representing about 72 million people) face food crises related to climate—up from 12 countries (and 56.8 million people) in 2022.

Despite some countries adopting measures to address environmental externalities, imbalanced regional development has led to different rural transformation paths. Countries such as India and China have improved agricultural productivity through large-scale irrigation projects, mitigating climate change uncertainties, promoting the commercialisation and diversification of agriculture and accelerating rural transformation. However, in Africa, especially sub-Saharan Africa, irrigation infrastructure is insufficient, with most agriculture relying on rain, leading to low and unstable productivity and hindering rural transformation towards higher value-added agriculture and non-agricultural industries. In these regions, GDP per capita growth has not reduced poverty and agricultural productivity growth remains low (Dercon and Gollin 2014; Wuyts and Kilama 2015). Although the share of agriculture in GDP and employment has declined, the non-agricultural labour force has shifted more towards non-trade service industries rather than manufacturing (IFAD 2016; Rodrik 2015).

Traditionally, rural transformation has been deficient in considering inclusiveness, fairness and sustainability. First, regarding inclusiveness, agricultural labour productivity focuses on overall output efficiency. Policies and strategies often support large agricultural operators who can boost productivity, neglecting the productivity and income of small farmers and vulnerable groups. The emphasis on high-value agricultural products highlights economic benefits but overlooks whether small farmers have the resources to produce these products, potentially excluding them from high-profit production. Second, the focus on the proportion of non-agricultural GDP emphasises agricultural economic growth without reflecting on the fairness of income distribution. This can hide significant income disparities within rural areas, concentrating resources and opportunities among large farmers and affluent groups. Last, traditional agricultural total factor productivity (TFP) emphasises input–output efficiency but ignores potential environmental degradation and resource depletion during production, which is detrimental to the long-term sustainability of agricultural development.

To spearhead a new era of rural revitalisation, China is leading the way among developing countries by focusing on enhancing ‘new quality’ agricultural productivity—a concept that emphasises inclusion, fairness and sustainability. Inclusiveness is addressed by considering a broader range of input factors, such as natural resources and weather. In terms of fairness, this approach aims to improve resource utilisation efficiency, reduce waste and environmental damage and increase farmers’ income through efficient production, promoting a fair distribution of resources and benefits. This is particularly important for developing countries because it encourages small farmers to participate in efficient, low-consumption agricultural production through technological and managerial innovations, thus improving their market competitiveness and achieving more inclusive development. Finally, sustainability is achieved by prioritising the efficient use of resources and environmental protection, which includes reducing chemical inputs and enhancing water efficiency—all aimed at supporting long-term agricultural resilience.

Enhancing ‘new quality’ agricultural productivity and fostering comprehensive rural revitalisation can take two primary pathways: capital deepening and sustainable environmental development. Capital deepening in agricultural production is the process of increasing the amount of capital, such as machinery, equipment and infrastructure, used in the production process relative to the amount of labour. Historically, developed countries such as the United States and Australia have effectively utilised capital-intensive technologies to spur agricultural productivity growth. The abundant natural resources in these nations, such as land, have diminished the potential for marginal improvements through biological and chemical technologies—a scenario that many land-scarce developing countries cannot replicate.

China has forged a unique path to capital deepening: the emergence of innovative management and business models, such as customised services, is transforming agricultural production methods and propelling a significant leap in productivity in developing countries. This is accomplished by integrating technological advancements into the use of capital goods (Sheng et al. 2022). For example, the development of customised service systems enables the substitution of capital for labour in areas that are densely populated and have limited land. This not only alleviates labour shortages at a reduced cost but also establishes conditions that are favourable for the adoption of sophisticated technologies. In contrast to labour-intensive technological advancements, this new capital-intensive approach, supported by customised services, is gaining popularity as a sustainable engine for agricultural productivity growth.

Concurrently, capital deepening facilitates the spread of agricultural technologies across regions with diverse agricultural ecosystems and climates, thereby reducing disparities in agricultural production efficiency. The natural geographic variations have historically limited the transferability of agricultural technologies between different ecological and climatic zones, leading to international differences in agricultural productivity (Gollin et al. 2014a, 2014b). Nevertheless, investments in R&D, particularly in fields such as biotechnology, AI and information technology, have enabled the broader application of agricultural technologies across regions (Sheng et al. 2015). Genetic modifications, for example, have made certain crops and livestock varieties originally suited for humid conditions more drought-resistant, allowing them to thrive in arid regions and thereby enhancing agricultural output and efficiency.

Figure 12.7 depicts the relationship between agricultural productivity—measured by TFP—and the degree of capital deepening in China relative to major developed countries. Generally, these developed countries and regions have achieved a higher level of capital accumulation. The European Union and Australia, in particular, are currently in a phase in which they are increasing capital investment to bolster productivity. Their agricultural productivity continues to grow at a rate that exceeds that of China, indicating a trend of convergence. However, in the United States, there is a clear negative relationship between agricultural productivity and capital deepening. This suggests that the United States has been the first to complete the phase of promoting productivity growth through increased capital investment, beyond which capital investment has started to decline.

Figure 12.7: The pathways of agricultural capital intensification across countries (regions), 1978–2019

Source: Authors’ estimations based on the International Comparison of Agricultural Productivity database (icapproject.com/).

China’s agricultural capital accumulation is positively correlated with its agricultural productivity and its capital deepening is still on an upward trajectory, potentially progressing towards an optimal level in comparison with major developed countries and regions. Thus, there remains significant policy space for enhancing agricultural productivity in the future, particularly in the process of improving ‘new quality’ productivity. However, it should be noted that due to the declining efficiency of existing public capital investment, the current mode of such investment may no longer support the continuous growth of agricultural productivity (as evidenced by the downward trend in the internal rates of return on China’s infrastructure investment in the previous section). Therefore, the direction of China’s agricultural investment will require substantial reform.

An environmentally sustainable development path is another crucial route to achieving ‘new quality’ in agricultural productivity. This approach emphasises maintaining or enhancing agricultural output while minimising the social and environmental costs associated with agricultural production. Meeting the growing global demand for food while achieving sustainable agricultural development presents a notable challenge. Throughout the long-term development of agriculture, producers have either increased the input of new land into production or enhanced yields to meet the ever-increasing demand by adding labour, machinery, energy, fertilisers and other inputs. Despite the remarkable achievements in global agricultural development, current production methods, including the massive increase in reactive nitrogen use and changes in land systems, may undermine land productivity, thereby affecting the long-term sustainability of agriculture. Data indicate that if the current trend of global land degradation continues, 1.5 billion hectares of degraded land will need to be restored by 2030 to achieve the zero-growth target for land degradation set in the UN Sustainable Development Goals (UN 2024).

Environmental conditions are crucial determinants of agricultural production, but the heterogeneity of these across countries leads to diverse paths in the pursuit of sustainable agricultural development. Figure 12.8 summarises the general principles of sustainable agricultural development by comparing the relationship between agricultural land productivity and agricultural labour productivity in China and major developed countries and regions. As shown, there is a positive correlation between agricultural land productivity and labour productivity in all countries. However, a weaker positive relationship indicates higher land production efficiency, implying a greater role for sustainable environmental utilisation in agricultural development. Because US agricultural production is capital-intensive and relies more on land to address agricultural development issues, its degree of resource utilisation contributes less to the sustainability of agriculture. In contrast, European countries and Australia, although initially following a similar development path to the United States, have recently begun to shift towards more effective resource utilisation methods.

Figure 12.8: Pathways to agricultural productivity across countries (regions), 1978–2019

Source: Authors’ estimations based on the International Comparison of Agricultural Productivity database (icapproject.com/).

Compared with major developed countries, China has increased agricultural productivity by relying on land and resource consumption. However, the effect of relying on land resources to enhance agricultural productivity is diminishing, meaning that further increases in land input cannot bring about more growth in productivity. Developed countries such as those in Europe and Australia have already effectively improved the sustainability of agricultural production through policies such as green agriculture. Only the United States still maintains a high dependency on resource consumption, with agricultural income growth coming at the expense of the environment. If the current path continues, the sustainability of China’s agricultural production will gradually decrease to below that of the United States.

Since the early twenty-first century, China has been making efforts to improve the efficiency of land and other natural resource utilisation. In 2005, China initiated environmental policies such as emission and fertiliser reduction, leading to a significant improvement in the country’s land production efficiency. There is a need to further enhance environmental efficiency by drawing on the sustainable agricultural development models of developed countries and regions such as Europe and Australia.

Conclusion

Over the past half-century, China has made remarkable achievements in rural revitalisation, transforming its agricultural landscape through strategic reforms and investments. The country has witnessed a significant increase in agricultural productivity, which has been instrumental in lifting millions of people out of poverty and enhancing the quality of life in rural areas. China’s approach to rural development has been characterised by large-scale infrastructure projects, technological advancements in farming and policies that encourage diversification and modernisation of the agricultural sector. This progress has not only improved the livelihoods of rural populations but also contributed to the nation’s overall economic growth and food security.

Currently, China has shifted in a new direction for rural transformation and revitalisation, focusing on enhancing the ‘new quality’ of agricultural productivity. This concept goes beyond traditional measures of output and efficiency, incorporating principles of inclusiveness and environmental sustainability. By emphasising these values, China aims to ensure that the benefits of agricultural growth are equitably distributed and that the practices adopted do not compromise the environment for future generations. This holistic approach to development seeks to create a balanced and lasting impact on rural communities, promoting economic prosperity in harmony with nature.

China’s remarkable progress in rural revitalisation over the past 50 years serves as a beacon for developing countries navigating similar paths. Yet, the road ahead is not without obstacles. The imperative to address environmental and resource degradation, financial constraints and the uneven distribution of skills and resources calls for a comprehensive and nuanced policy approach. To this end, a series of strategic reforms must be pursued with vigour and foresight.

First, it is imperative to reform the science and technology policy system to ensure that it effectively supports the advancement of agricultural practices. This can be achieved by significantly increasing public investment in R&D, with a particular focus on biotechnology, digital technology and agricultural machinery technology. Such a reform will be pivotal in driving innovation that not only enhances productivity but also fortifies the agricultural sector against the impacts of climate change. By prioritising these areas, the potential for sustainable resource use can be maximised, leading to a more resilient and efficient agricultural sector that is better equipped to meet external shocks and can continue to thrive in the face of environmental and economic pressures.

Second, there is a clear need for the government to redefine its role in facilitating rural transformation. Market-oriented reforms should be at the forefront of this strategy, aimed at accelerating the transition to a more efficient and high-quality agricultural sector. It is essential that these reforms are designed to promote a sector that is not only productive but also environmentally sustainable and socially inclusive. To achieve this, the government must also focus on optimising the auxiliary role of institutional, policy and investment measures. These measures should be crafted to support and complement market mechanisms, ensuring that they effectively contribute to the development of the agricultural sector. The goal is to create an environment that encourages sustainable development, where the ‘new quality’ of agricultural productivity is not just a static objective but an ongoing process that adapts and innovates in response to the ever-evolving challenges of rural development.

Last, and closely intertwined with the previous point, is the necessity to recognise the unique paths to transformation of China’s diverse rural regions. The promotion of new agricultural technologies must be sensitive to the varied conditions across the country’s vast expanse. By understanding and acknowledging the specific characteristics and stages of development of each region, from pastoral lands to fisheries and the forestry sector, policies can be crafted to resonate with the local context. This tailored approach is essential for the effective empowerment of small farmers, enabling them to harness technological solutions that are not only appropriate but also responsive to their immediate needs. Such an approach allows for the improvement of the productivity of land and water resources, which in turn increases farmers’ income and bolsters overall food security. It is through this inclusive and region-specific policy implementation that the interventions can avoid the pitfalls of a one-size-fits-all strategy, ensuring that rural transformation is both sustainable and equitable across China’s varied rural landscapes.

Acknowlegements

This research was supported by the Postdoctoral Fellowship Program of CPSF (No. GZB20240034). The views expressed in this chapter are solely the authors’ and do not necessarily reflect the views of the supporting agencies and authors’ affiliations.

References

Alston, Julian M., and Philip G. Pardey. 2014. ‘Agriculture in the Global Economy.’ Journal of Economic Perspectives 28, no. 1: 121–46. doi.org/10.1257/jep.28.1.121.

Barrett, Christopher B., Luc Christiaensen, Megan Sheahan, and Abebe Shimeles. 2017. ‘On the Structural Transformation of Rural Africa.’ Journal of African Economies 26, [S1]: i11–i35. doi.org/10.1093/jae/ejx009.

Block, Steven A. 1994. ‘A New View of Agricultural Productivity in Sub-Saharan Africa.’ American Journal of Agricultural Economics 76, no. 3: 619–24. doi.org/10.2307/1243676.

Boserup, Ester. 1976. ‘Environment, Population, and Technology in Primitive Societies.’ Population and Development Review 2, no. 1: 21–36. doi.org/10.2307/1971529.

Byerlee, Derek R., Alain De Janvry, Irina Klytchnikova, Elisabeth Marie L. Sadoulet, and Robert Townsend. 2008. World Development Report 2008: Agriculture for Development. Washington, DC: World Bank. documents.worldbank.org/en/publication/documents-reports/documentdetail/587251468175472382/world-development-report-2008-agriculture-for-development.

Dercon, Stefan, and Douglas Gollin. 2014. ‘Agriculture in African Development: Theories and Strategies.’ Annual Review of Resource Economics 6: 471–92. doi.org/10.1146/annurev-resource-100913-012706.

Dethier, Jean-Jacques, and Alexandra Effenberger. 2012. ‘Agriculture and Development: A Brief Review of the Literature.’ Economic Systems 36, no. 2: 175–205. doi.org/10.1016/j.ecosys.2011.09.003.

Food and Agriculture Organization of the United Nations (FAO). 2018. ‘Increased Soil Contamination Puts Food Safety and Food Security at Risk.’ News, 5 December. Rome: FAO. www.fao.org/newsroom/detail/Increased-soil-contamination-puts-food-safety-and-food-security-at-risk/en#:~:text=According%20to%20FAO%2C%20about%2033,deteriorating%20at%20an%20alarming%20rate.&text=5%20December%202018%2C%20Rome%20%2D%20Urgent,today%20marking%20World%20Soil%20Day.

Food and Agriculture Organization of the United Nations (FAO). 2021. The State of the World’s Land and Water Resources for Food and Agriculture 2021—Systems at Breaking Point. Rome: FAO. doi.org/10.4060/cb9910en.

Food and Agriculture Organization of the United Nations (FAO). 2024. The State of Food and Agriculture 2024: Value-Driven Transformation of Agrifood Systems. Rome: FAO. doi.org/10.4060/cd2616en.

Food Security Information Network (FSIN), and Global Network Against Food Crises (GNAFC). 2024. 2024 Global Report on Food Crises: Joint Analysis for Better Decisions. Rome: Food Security Information Network. www.fsinplatform.org/report/global-report-food-crises-2024/.

Gale, Fred. 2013. Growth and Evolution in China’s Agricultural Support Policies. Economic Research Report No. 153, August. Washington, DC: United States Department of Agriculture. www.ers.usda.gov/publications/pub-details?pubid=45118.

Gatti, Nicolas, Kathy Baylis, and Benjamin Crost. 2021. ‘Can Irrigation Infrastructure Mitigate the Effect of Rainfall Shocks on Conflict? Evidence from Indonesia.’ American Journal of Agricultural Economics 103, no. 1: 211–31. doi.org/10.1002/ajae.12092.

Gollin, Douglas, David Lagakos, and Michael E. Waugh. 2014a. ‘Agricultural Productivity Differences across Countries.’ American Economic Review 104, no. 5: 165–70. doi.org/10.1257/aer.104.5.165.

Gollin, Douglas, David Lagakos, and Michael E. Waugh. 2014b. ‘The Agricultural Productivity Gap.’ The Quarterly Journal of Economics 129, no. 2: 939–93. doi.org/10.1093/qje/qjt056.

Hao, E., K. Hu, and X. Chen. 2015. ‘The Income-Increasing Effect of Rural Infrastructure Stock: An Analysis Based on the Panel Data of 30 Provinces in China.’ Rural Economy: 54–68.

Huang, J.K. 2020. ‘Rural Revitalisation: Rural Transformation, Structural Transformation and Government Functions.’ Issues in Agricultural Economy: 4–16.

International Fund for Agricultural Development (IFAD). 2016. Rural Development Report 2016: Fostering Inclusive Rural Transformation. Rome: International Fund for Agricultural Development. www.ifad.org/en/w/publications/rural-development-report-2016.

Johnston, Bruce F. 1970. ‘Agriculture and Structural Transformation in Developing Countries: A Survey of Research.’ Journal of Economic Literature 8: 369–404.

Li, J., Z. Feng, and Q. Wu. 2019. ‘Study on the Cost Saving Effect of Farmland Water Conservancy Facilities on Grain Production.’ Reform: 102–13.

Luo, Y., X. Luo, and L. Wang. 2020. ‘Rural Infrastructure, Labour Productivity Gap between Industry and Agriculture, and Non-Agricultural Employment.’ Journal of Management World 36: 91–121.

Orden, David, Rashid S. Kaukab, and Eugenio Diaz-Bonilla. 2003. Liberalizing Agricultural Trade and Developing Countries. Global Policy Program Issue Brief, November. Washington, DC: Carnegie Endowment for International Peace. carnegieendowment.org/posts/2003/03/liberalizing-agricultural-trade-and-developing-countries-march-13-2003?lang=en.

Rodrik, Dani. 2015. ‘Premature Deindustrialization.’ Journal of Economic Growth 21: 1–33. doi.org/10.1007/s10887-015-9122-3.

Schultz, Theodore W. 1964. Transforming Traditional Agriculture. New Haven: Yale University Press.

Sheng, Yu, V. Eldon Ball, Kenneth Erickson, and Carlos San Juan Mesonada. 2022. ‘Cross-Country Agricultural TFP Convergence and Capital Deepening: Evidence for Induced Innovation from 17 OECD Countries.’ Journal of Productivity Analysis 58: 185–202. doi.org/10.1007/s11123-022-00646-z.

Sheng, Yu, Eldon Ball, and Katerina Nossal. 2015. ‘Comparing Agricultural Total Factor Productivity between Australia, Canada, and the United States, 1961–2006.’ International Productivity Monitor, no. 29: 38–59. www.csls.ca/ipm/29/shengballandnossal.pdf.

Sheng, Y., T.T. Zhou, A.Z. Wang, and H.Y. Deng. 2024. ‘Dynamic Influence of Irrigation Infrastructure on Total Factor Productivity of China’s Crop Industry.’ Journal of Huazhong Agricultural University (Social Sciences Edition): 39–48.

United Nations (UN). 2024. The Sustainable Development Goals Report 2024. New York: United Nations. unstats.un.org/sdgs/report/2024/.

United Nations Department of Economic and Social Affairs (UNDESA). 2015. Global Sustainable Development Report: 2015 Edition. New York: United Nations Department of Economic and Social Affairs. www.un.org/en/development/desa/publications/global-sustainable-development-report-2015-edition.html.

United Nations Statistics Division. 2023. ‘6. Clean Water and Sanitation.’ The Sustainable Development Goals Report 2023: Special Edition. New York: United Nations Department of Economic and Social Affairs. unstats.un.org/sdgs/report/2023/Goal-06/.

Wang, Yangjie, Jikun Huang, Jinxia Wang, and Christopher Findlay. 2017. ‘Mitigating Rice Production Risks from Drought Through Improving Irrigation Infrastructure and Management in China.’ The Australian Journal of Agricultural and Resource Economics 62, no. 1: 161–76. doi.org/10.1111/1467-8489.12241.

World Bank. 2023. World Development Indicators. Washington, DC: World Bank. databank.worldbank.org/source/world-development-indicators.

Wu, Q., G. Li, X. Zhou, and Z. Feng. 2015. ‘Infrastructure, Agricultural Location and Crop Structure Adjustment: An Empirical Study Based on Provincial Panel Data from 1995 to 2013.’ Journal of Agrotechnical Economics: 25–32.

Wu, Q., X. Zhou, and Z. Feng. 2014. ‘Does Infrastructure Reduce Agricultural Production Costs? Based on Quantile Regression.’ Journal of Huazhong Agricultural University (Social Sciences Edition): 53–59.

Wuyts, Marc, and Blandina Kilama. 2015. ‘Planning for Agricultural Change and Economic Transformation in Tanzania?’ Journal of Agrarian Change 16, no. 2: 318–41. doi.org/10.1111/joac.12111.

---

1. 1 FAOSTAT: www.fao.org/faostat/en/#home.

2. 2 ERS: www.ers.usda.gov/data-products/international-agricultural-productivity/.

3. 3 NBS: data.stats.gov.cn/.