China’s rural supply cooperatives should involve government-backed private firms, former official says
- Amid worries that China is heading down another planned-economy path, son of the late General Secretary Hu Yaobang weighs in with a pro-market perspective
- An ardent supporter of China’s opening up and market economy, Hu Deping says that a government-controlled rural cooperative economy must be avoided
Amid a cacophony of concerns that Beijing’s pursuit of a bigger state role could put China on a path toward a new planned-economy era, a normally quiet former politician has joined the chorus calling for private players and market forces to advance national development strategies.
Hu Deping, the eldest son of late Communist Party General Secretary Hu Yaobang, said supply cooperatives play a vital role in the development of China’s rural areas as part of its common-prosperity push, but he contends that the best model should involve private entities with government assistance.
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His comments appeared last week in the monthly publication of the Chinese Private Technology Entrepreneur Association.
His father was known for helping to clean up the mess of the 1966-76 Cultural Revolution as head of the Organisation Department of the Communist Party, liberating tens of thousands of cadres who had been wronged during the period. He then served as general secretary under paramount leader Deng Xiaoping, promoting reform and opening up before eventually being dismissed in 1987.
The 80-year-old Hu Deping, a former vice-chairman of the All-China Federation of Industry and Commerce and deputy director of the Economic Affairs Committee of the Chinese People’s Political Consultative Conference, is widely seen as an ardent supporter of the country’s opening up and market economy, as well as an influential liberal thinker.
Known for being outspoken in the past, Hu turned relatively quiet in recent years.
What we need to avoid the most is the government-controlled rural cooperative economy
“My understanding is that the current supply cooperatives are no longer in the command-economy style,” he was quoted as saying, referring to a system in which the central government would be dictating production levels while controlling distribution and pricing. “The cooperative economy has no contradictions with the market economy.
“What we need to avoid the most is the government-controlled rural cooperative economy.
“As the force of the market economy becomes strong, many works undertaken by supply cooperatives can be done by market and private firms. The government should coordinate their competition and cooperation appropriately.”
The private economy mushroomed after China embarked on a path of economic reform and opened its doors to the rest of the world in the late 1970s. The private economy now accounts for more than half of China’s tax revenues, 60 per cent of its gross domestic product, and more than 80 per cent of urban employment.
Anbound, a Hong Kong-based think tank, attributed the heated public discourse over supply cooperatives to a lack of confidence in the current domestic market.
Hu noted how the party’s founding fathers had favourable feelings for the rural-cooperative economy, and he said government control was a key reason the All-China Federation of Supply and Marketing Cooperatives performed poorly for a long period.
The federation, set up in 1950 to oversee agricultural, fishery, production, credit and other cooperatives nationwide, ended up being absorbed by the commerce ministry in 1982. It was then re-organised to focus on supplying agricultural and consumer goods to rural areas.
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With 37,652 outlets nationwide, the federation reported 5.3 trillion yuan (US$750 billion) in sales revenue in 2020, an increase of 14.2 per cent from a year earlier. The total included 866.7 billion yuan worth of agricultural production materials, 2.2 trillion yuan worth of farm produce and 1.8 trillion yuan worth of consumer goods.
The revenue was small compared with the 44 trillion yuan worth of total retail sales in China that year.
Hu said the government’s emphasis on rural cooperatives, including supply and credit cooperatives, could result in more bank funding or private capital to support the development of agriculture and rural areas – a key goal in Beijing’s efforts to revitalise rural areas and narrow the wealth gap with urban regions.
“The use of a cooperative economy and market mechanisms will greatly benefit the common-prosperity efforts,” he added.
