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     Gung Ho Newsletter No.84
Add Time :2008-07-28      Hits:6822



CRPRC DLA Localization Workshop

Cooperatives Reducing Poverty in Rural China (CRPRC) project Development Ladder Assessment (DLA) Localization Workshop was held from May 9 to 11, 2008. 27 people attended. Participants included representatives from relevant government agencies at national and county level, and from research and teaching organizations, also representatives of cooperatives which have been trying out the DLA, and people from relevant NGO's.

These were: Vedia Achmad Djamaludin from Indonesia, Professor Xu Xuchu from Zhejiang University, Zhao Tieqiao from the Ministry of Agriculture Rural Cooperative Economic Management Station, Ren Dapeng from China Agricultural University, Xu Renfa from the Beijing Agricultural Commission, Liu Hui from All China Federation of Supply & Marketing Cooperatives (ACFSMC), Miao Jianping from China Cooperative Economic Studies Institute, Zhang Xiaoshan from Rural Development Institute Chinese Academy of Social Sciences (CASS RDI), Yi Xiaoqing from the CASS Environmental Research Institute, Li Zhonghua from Qingdao Agricultural University, Wang Fu from the Shandan Shilipu Barley Cooperative, Li Fengwu from the Shandan Agriculture Management Station, Xu Wenke from the Sichuan Renshou Qingjian Cooperative, Cheng Jianwen from the Renshou Agriculture Bureau, Yang Linzhuan from the Qianyang Womens Handicraft Cooperative, Liu Jirong from Anhui Finance and Economics University, ICCIC Secretary General Liu Denggao and ICCIC Vice-chair Yuan Peng, Executive Members Guo Lulai, Miao Zaifang, Tim, Tang Zongkun and others.


Study Tour in Beijing Pinggu

On May 12, 2008, six delegates from CRPRC pilot cooperatives visited the Beijing Pinggu Pingyixiang Fruit Professional Cooperative (平谷品溢香果品专业合作社) and the Lianzhongtongda Pig Breeding Cooperative(联众通达生猪养殖合作社). They were: Xu Wenke from the Renshou Qingjian Orange professional cooperative, Cheng Jianwen from the Renshou Agriculture Bureau, Wang Fu from the Shandan Shilipu Barley professional cooperative, Li Fengwu from the Shandan Agriculture Economic Administration station, Yang Linzhuan and Li Yinhui from the Shanxi Xinxing handicraft cooperative.  Three from the  CRPRC project team joined them.


Representative of the CCA Sent Letters to Express Concern about  the Effect of the Earthquake on the Qingjian Fruit Industry Professional Cooperatives of Renshou County, Sichuan Province

At 28 minutes and 4 seconds past 2 p.m. on May 12, 2008,  Beijing Time, an earthquake of 8 degrees magnitude  shook  Wenchuan county (Latitude 31.0 degrees North and Longitude 103.4 degrees East) in Sichuan Province.


The earthquake also affected the neighboring provinces of Shaanxi, Gansu, Qinghai and Ningxia.

David Shanks and Bill Turner of the Canadian Cooperatives Association sent messages inquiring whether the CRPRC project pilot Qingjian Fruit Industry Professional Cooperatives of Renshou County, Sichuan Province, had been damaged and giving greetings to the cooperatives members.

ICCIC Members Activity

For their quarterly activity, a jolly party of ICCIC members gathered at the office at 9:30 on 16 May 2008 and boarded a bus for Shentangyu in Huairou, about one and a half hours drive north.


Shentangyu is a scenic spot in mountainous Huairou District. Over the last 20 years or so, agriculture has been gradually replaced by tourism to provide 90% of the rural income. Scenic spots like Shentangyu are a "hook", drawing city folks for weekends and vacations. Rural households provide overnight accommodation and meals of organic local produce. The government has helped by funded some infrastructure improvements, like putting in car parks and public toilets, improving the roads, and licensing the industry to guarantee health and safety. The village of Guandi began this hospitality industry in 1993, when Ms Shan Shuzhi (单淑芝)and a couple of other families began taking in guests. By 1996, about 20 of the village's 50 or so households were taking in overnight guests.


The Coop Chair Ms Shan showed us around her guest house, with its beautiful kitchen - which has picture windows on both sides (so that guests can see how clean and modern the kitchen is), and half a dozen rooms, each with one standard bed and one wide bed, reminiscent of the traditional kang, brick platform bed, wide enough for three adults - or a few more children - to sleep abreast. Each guest room has its own bathroom where hot showers can be taken any time during the day or night. All this for the cost of 80 yuan per room, regardless of occupancy (max 4 adults).


Our party then gathered in her beautiful upstairs dining room, but had no time to admire the view as we were kept busy listening to Huairou County Agriculture Commission Party Secretary Mr Wang and Coop Chair Ms Shan  briefing us on  local developments. Then we plied them with questions.


We learned that on 28 April, 2007, some such families got together and formed the Buyegu  ("nightless valley") Coop, reducing costs by bulk purchasing (food, etc.) services, and promoting business by standardizing quality (kitchen outfitting, bedroom fixtures and furnishing, etc.),  hygiene standards, etc.


Now, the village, which stretches about 1.5 km along one side of a stream in a valley, has a population of 147 in 58 households. 47 of these households run guest houses, and 22 of them are members of the coop.  The coops help spread the guests more equitably around, which put an end to the downward spiraling of prices - and hence quality of service - due to competition.


After the lively exchange, we split into groups of three or four, each group following one coop member to their home for lunch.           

(Michael Crook)


ICCIC Signs Cooperation Agreement with Women of Ningxia Association

On May 21, 2008, the ICCIC vice-chair, Michael Crook, and Secretary General Liu Denggao, met the vice-president of the “Women of Ningxia Association” (France), Mme. Perrine and her entourage in the ICCIC office. Mme. Perrine introduced Mme. Benedicte who will succeed her in her work in China with the ICCIC. The latter plans to invite Ms. Miao Zaifang to work as language assistant for the cooperation project. Vice-chair Michael Crook on behalf of the ICCIC signed the Cooperation Agreement with Mme. Perrine on behalf of the Women of Ningxia Association after both parties had had further discussion on problems related to the Ningxia Baihua Embroidery Cooperative. Others at the meeting were Executive member Miao Zaifang, and the staff, Ren Guangji and Wu Haili.


 Seminar on “Innovative Mode for Development of Beijing Farmers’ Cooperatives”

On May 26, 2008, a seminar on “Innovative Mode for the Development of Beijing Farmers’ Cooperatives” was held in the meeting room of the Rural Development Institute by the Rural Development Institute of the Chinese Academy of Social Sciences, the Economics Department of Peking University and the ICCIC.  The meetings were presided over by Associate Professor Wang Shuguang of the Economics Department of Peking University and the ICCIC vice-president Yuan Peng.

The ICCIC executive members Guo Lulai, Miao Zaifang and Cha Tianmu; Tang Zongkun, the ICCIC executive secretary general; Du Yintang, assistant to the president of the Economics Department of Peking University, Professor Zhang Zhen; the section manager of the Beijing Rural Management and Administration Institution, Han Sheng; and  representatives of Beijing Cooperatives attended the seminar.


Vice-Chair Yuan Peng Attended the 2008 International Federation of Agricultural Producers' World Farmer Congress and the CCA Agricultural Partners’ Forum in Warsaw, Poland

From May 28 to June 7, 2008, ICCIC Vice-Chair Yuan Peng attended, at the invitation of the Canadian Co-operative Association (CCA), the 2008 International Federation of Agricultural Producers' World Farmer Congress and the CCA Agricultural Partners’ Forum in Warsaw, Poland.


These two events were an effort by the CCA to engage partners in international trends that affect them and to learn from partners to enhance international development programmes.


The World Farmer Congress 2008 was the 38th meeting of farmer groups and co-operatives around the world organized by the International Federation of Agricultural Producers (IFAP). The IFAP is a strong supporter of co-operatives, representing over 600 million farm families grouped in 115 national organisations in 80 countries. It is a global network in which farmers from industrialised and developing countries exchange concerns and set common priorities. The IFAP has been advocating farmer’s interests at the international level since 1946 and has General Consultative Status with the Economic and Social Council of the United Nations.


The Second Executive Meeting was held in Beijing

The Second ICCIC Executive meeting was held on 19 June, 2008, in Beijing. Vice-chair Michael Crook, Executive members Guo Lulai, Miao Zaifang, Tang Zongkun, Yu Lin and Tim Zachernuk, General Secretary Liu Denggao and Executive General Secretary Du Yintang attended.  Vice-chair Yuan Peng and Alternate Executive Member Li Zhonghua attended via E-mail feedback.


The ICCIC Member, Wang Cuiyu, Awarded the Spirit of Devotion Prize as “Chinese Person of the Year in the Cooperative Economy” for 2007

The first person of the year in the field of the cooperative economy to be elected was the president of the Shanghai Women’s Experimental Correspondence College of Further Education, Wang Cuiyu.  She was awarded the spirit of devotion prize as “Chinese Person of the Year in the Cooperative Economy” for 2007.


The awards ceremony was solemnly held on the morning of May 31 in the Report Hall on the first floor of the Yifu Auditorium of Beijing Renmin University of China. The standing committee member of the National People’s Congress and  executive deputy director of the executive council of the Chinese Supply and Marketing Cooperatives, Zhou Shengtao; the president of Renmin University, Ji Baocheng; and leaders of the relevant departments and organizations of the Ministry of Finance, the Ministry of Agriculture, the National Industrial and Commercial Administration General Bureau, the National Women’s Federation, the National Association for Science and Technology, were among those who attended the ceremony and awarded the prizes to the award-winners.

Since such activity to choose the award winner was started formally from July of last year, hundreds of cooperative economy organizations in over 30 provincial and municipal autonomous regions all over the country have taken part. After the list of candidates was disclosed on December 18, 2007, the number of voters all over the country reached nearly a million.  People in various circles of society gave their appraisal of the candidates and of this activity through various channels. The president of the Shanghai Women’s Experimental Correspondence College of  Further Education, Wang Cuiyu, She has insisted on establishing cooperatives as one of the bases of women’s mass education, so that they could become prosperous. She firmly believes that only if laborers, especially vulnerable groups of woman are organized and join together, can they get rid of poverty and become prosperous as well as becoming successful and useful. As a leader of the cooperative economy, she suffered hardships and undertook hard work She dedicated herself unselfishly, strove hard and introduced innovations; and all these outstanding qualities were brought up and advocated during the entire course of choosing the award winner.





Create a New Chapter for Cooperatives

--Commemorating International Cooperative Day


On June 30, 2008, when the “Farmers’ Professional Cooperative Law of The People's Republic of China” was one year old, the ICCIC invited Canadian, British and Japanese cooperative experts in Beijing and  those from the two sides of the Taiwan Straits to get together with the ICCIC committee members  in the Beijing ICCIC meeting room to commemorate  International Cooperative Day. Lu Wanru, who had been the secretary of the promoter of the ICCIC, the famous foreign friend Rewi Alley during his lifetime, and Tang Zongkun, who is the senior cooperative expert and a researcher at the Chinese Academy of Social Sciences were among those at the meeting.


The seminar was presided over by British/Canadian friend Mr. Michael Crook, who is the executive vice-president of the ICCIC. The wide-ranging discussion covered the new experiences of cooperatives in every country, and the effect, experience and problems of the Farmers’ Professional Cooperative Law passed in China a year ago.


Xu Renfa, who is a member of the Guiding Team of Experts on the Beijing Committee for Agriculture and the former director of the Agriculture Committee, gave an account of the farmers' professional cooperatives in Miyun County, Beijing


These cooperatives were the earliest in China, and the standing committee member of the National People's Congress, experts from the relevant ministries, from the Political Consultative Conference and from the State Department have investigated and studied Miyun over the years. After the “Farmers’ Professional Cooperative Law” was passed, the development of these  Miyun County cooperatves shot ahead. At present, there are 280 professional cooperatives in the county.  The  50,000 farmer households  in the cooperatives account for 70% of the total farmer households; 60% of the main agricultural products are sold through cooperatives; the income of the members  is 10%-15% higher than non-member farmers. The Aojinda Honey Cooperative has gone in for the deep processing of honey from the initial joint sales. Compared with the sales of honey by individual households, the joint sales of honey by cooperatives is higher by 200 yuan per ton, and by 700 yuan to 2000 yuan per ton for deeply processed honey. The members say cheerfully that the cooperatives are running more and more enthusiastically, and that their own lives are sweeter than honey since joining the cooperatives. A new characteristic of the development of the Miyun Cooperatives is that the professional cooperatives in the same industry are joining up, for example, the dairy cow professional cooperatives in various villages have now joined up to form two associated cooperatives -- the fresh milk purchased by one accounts for 70% of that of the whole county, and the other accounts for 30%. The associated cooperatives sell the fresh milk to those whose credit is high and who offer high prices, according to the wishes of members. Such cooperatives have established trade relationship with five milk processing enterprises in Beijing and Tianjin, and have ended the situation whereby one or two milk products enterprises   monopolized the Miyun fresh milk market. 


 “CICA” stands for the Chinese Industrial Cooperative Association, which is a non-governmental organization promoted and established by Chinese and foreign personages including the New Zealander Rewi Alley, the American  Edgar  Snow, and Madam Song Qingling, all of whom were devoted to popularizing cooperatives in China, promoting the development of Chinese national industry, and supporting the China during the Anti-Japanese War. “ICCIC” stands for the International Committee for the Promotion of Chinese Industrial Cooperatives.  It is an international organization established in Hong Kong by the famous Chinese  social activist Chen Hansheng along with Song Qingling, so as to help the CICA  support the development of Chinese cooperatives. 


In the 1980's “CICA” and “ICCIC” resumed operations.  Since then, the ICCIC has established cooperative relations with government and cooperative organizations of countries, notably Canada and New Zealand, as well as with some other international organizations, and has undertaken a series of projects promoting the development of cooperatives in China involving education, training and instruction. With the passing in China of the“Farmers’ Professional Cooperative Law", the promotion of cooperatives carried out by the ICCIC has entered a new stage.


The Canadian cooperative expert, Mr. Zha Tianmu, highly praised the Law in his speech. He said with deep feeling from his own experience that since  the  Law has come into effect, the international cooperative principle is now understood in society,  the farmer-run cooperatives are growing constantly, and the phenomenon of private control by companies over cooperatives is changing; the government's support for cooperatives is increasing, and the phenomenon of leading enterprises monopolizing the national fund for supporting farmers is changing; the range of training by cooperative instructors is growing and their ability is enhancing.


The cooperative expert from Taiwan, Mr. Chen Xiuxian, explained the history of and the new trends in the Taiwan cooperatives, and particularly described the developing situation of the Taiwan “Production and Marketing Groups” which mainly involve farmers. He said that the “Production and Marketing Groups” is an organization that does not use the name cooperative, but are like cooperatives in practice.  It is similar to the professional cooperatives on the mainland and is essentially a cooperative organization relying mainly on agricultural producers. He suggested that the cooperatives on the two sides of the Taiwan Straits exchange more information and develop together.

The commercial representative stationed in Beijing of the Economic Associated Cooperatives of the Japanese Agricultural Association, Mr. Yuan Teng Yi, explained the Japanese cooperative system, and particularly pointed out that the Association has three levels and three systems. The three levels are the basic cooperatives, the county associated cooperatives and the central associated cooperatives. The three systems are the comprehensive agricultural association of every level, the professional agricultural association of every level and the central association of every level. The basic comprehensive agricultural association provides supply of means of production, the primary processing of products, and the basic services of credit, insurance, and medical treatment for cooperatives members; the associated cooperatives of the comprehensive agricultural association above county level  primarily involves sales, storage, deep processing of agricultural products and services of credit, insurance, and medical treatment at a higher level for the basic agricultural association. The basic cooperatives is the host of the associated cooperatives, but this does not mean that the associated cooperatives direct the basic cooperatives.  He also explained that every municipality, district and prefecture has a local cooperatives central association, and there is also a national central association. These central associations are not engaged in specific economic affairs, but serve the basic cooperatives and the various associated cooperatives, and their principal day-to-day work is to deal with the farmers' suggestions on national development policy and to carry out cooperative training and give agricultural guidance.


The cooperative expert from the Academy of Social Sciences, who is the vice-president of the ICCIC, Yuan Peng, told of the international cooperative forum she attended in Poland. She particularly mentioned the new tendency to form transnational cooperative associations, for example, the eight cooperatives in seven countries of Central America have become an associated cooperative carrying out transnational cooperation.


In the ensuing discussion, all experts mentioned some new problems that have cropped up during the implementation of Cooperative Law, and think these problems are due to development, so they should be solved through development. They propose that primarily it is necessary to further carry out education on the meaning of cooperatives and to cultivate the cooperative spirit. The cooperative spirit is consistent with the conception of building a harmonious society, and cooperative training should not only carried out among agricultural cadres, but also among leading local government cadres. It was recommended that cooperative training and education should be included in the courses at the Party School. The second point raised was to utilize social forces for carrying out training. The ICCIC has gathered quite a few national and foreign senior cooperative experts who are keen for   cooperation between local governments and relevant research institutes, universities and colleges, so as to give more play in this respect. The third point was to encourage local governments to work out local regulations for guiding the development of cooperatives, and to perfect and detail the content of the national “Farmers’ Professional Cooperative Law", as well as to  clarify the detailed policies and measures by which the central and local governments support the development of cooperatives.  Fourth was to explore detailed measures for establishing cooperative associations and for executing a system of cooperative members’ congresses, and for accumulating new experience. Fifth was to summarize the experience of cooperatives in promoting their members to be in a dominating position, and in properly propagating the Cooperatives Law with demonstrative effect, so as to prevent companies from controlling the cooperatives, and prevent the cooperative members’ interests from being damaged.


At the meeting, it was also emphasized that the cooperatives should be added to the supply chain, and that the role of women should be strengthened. Speakers brought up the successful experience of small-scale farmer households in facing  market risks through cooperatives, and expressed full satisfaction and confidence in the achievements since the “Farmers’ Professional Cooperative Law” was passed one year ago.





 Liu Denggao

July 2, 2008






Message of the International Co-operative Alliance

86th ICA International Co-operative Day

14th UN International Day of Cooperatives

5 July 2008


“Confronting Climate Change through Co-operative Enterprise


Co-operatives are rising to the challenge of climate change at a scale and pace which shows leadership in a number of countries and sectors around the world. While some commit to cutting green house gas emissions, others are striving towards carbon neutrality, and all are working towards economic, social and environmental sustainability. Climate change is after all more than simply an environmental concern; it has an undeniable impact on the economic and social well-being of peoples around the world. Co-operatives in all sectors are confronting climate change – for example, agricultural and fishery co-operatives are looking at energy usage from production to market, they are looking at their emissions (carbon and nitrogen) seeking to be neutral or indeed have a positive impact they are embarking on green energy production or innovative feed to reduce emissions from livestock production; consumer co-operatives are seeking to reduce their carbon footprints both in-store, but also in terms of their own operations as well as their suppliers, and, they are active in providing education to members and consumers; housing co-operatives are using sustainable construction materials and designing eco-buildings; co-operative banks and credit unions are providing incentives to invest in energy efficient technology through competitive mortgage, consumer and business loans; insurance co-operatives are finding innovative ways to keep premiums down while still being able to cover the changing needs of their members with regard to the increasing risk due to extreme weather patterns and natural disasters linked to climate change; energy co-operatives are striving to provide clean and sustainable energy through wind, solar and bio-fuels; and many other co-operatives are working daily to ensure that they are sustainable enterprises both economically, socially, and environmentally.


A number of co-operatives have taken leadership roles at the international level partnering with the United Nations Environment Programme’s Climate Neutral Network, committing to the UN Global Compact "Caring for Climate" action platform, and many more are active at the national level. Equally, if not more important, however, are the actions taken on a daily basis by large and small co-operatives who are conscious that every effort no matter how small, can contribute to slowing climate change impacts.


These activities however are not new. After all, co-operatives have been active in promoting sustainable development for over 150 years. Because co-operatives are democratically controlled business, operating under values and principles which include social responsibility and caring for their communities, they strive to serve members not solely in economic terms, but also in the larger social, cultural and environmental scope.


Today, the international community is challenged by the food crisis and reconstruction efforts following natural disasters - both of which can at least in part be attributed to climate change.


Farmers, consumers and communities directly touched by these crises are finding that cooperatives

are assisting to the difficult task of adapting to the negative impacts of climate change. Co-operatives can help farmers address the increasing production challenges and provide greater stability of the farming sector while respecting environmental resources. Communities having to rebuild local economies following natural calamities can also seek a self-help option to address their needs through co-operatives, and can count on solidarity based on the principle of co-operation among co-operatives.


Recognising that climate change is one of the most critical global challenges of our time, ICA’s membership affirmed at its General Assembly in 2007 its commitment to address the causes of climate change and reduce its impact and real progress has been made. However, increased challenges and stress on the environment continue to grow and so further attention is required by all.


On this International Day of Co-operatives, the ICA calls on co-operators throughout the world to strengthen their activities in promoting sustainable development, celebrate actions that are already contributing substantively to mitigating climate change and work in partnership to ensure that co-operatives make significant contributions in confronting the climate change challenge.


ICA is an independent, non-governmental association which unites, represents and serves co-operatives worldwide. Founded in 1895, ICA has 218 member organisations from 87 countries active in all sectors of the economy. Together these co-operatives represent more than 800 million individuals worldwide.



The Development of Rural Cooperative Organizations in China Since the Reform

By Yuan Peng,

Researcher at the Rural Development Institute of the Chinese Academy of Social Sciences

Vice-chair of ICCIC


Abstract: After the reform was launched in China, the rural cooperative organizations developed into two types of organization. The first was the community-based rural cooperative organization mandatorily formed on basis of the People’s Commune system under government guidance, and the second was a new type of professional cooperative organization launched by farmers voluntarily with the encouragement of the government. The former was not very effective as it was created by the government mandatorily and could not completely break away from the traditional operational mode of the People’s Commune system, while the latter was an innovated organization formed by farmers to meet the requirements of the market-oriented economy and had full government support, and was therefore full of vitality. In the future, the rural cooperative organization will become the trend for improving the basic management system of the rural economy; and the professional rural cooperatives will play a leading role in this regard. But, the development and innovation of rural cooperative organizations still face two challenges: insufficiency of external promoters of  cooperative undertakings, and insufficiency of entrepreneurial cooperative leaders.


The all-round responsibility system-centered reform of the economic system launched in rural China in the late 1970s brought great changes to production and the management system, and fundamentally shook the then prevailing rural economic organization system under the traditional planned economy system --- the People’s Commune system. The widespread implementation of the household contract system meant that the farmers who were laborers under the traditional People’s Communne system became independent small-scale producers and operators possessing private property. The introduction of the market system and the reform of the state’s monopoly of the purchase and marketing of agricultural products gave farmers decision-making rights on the production, management and sales of some agricultural products, and enabled them to play a key role in production and be responsible for profits and losses. The market-oriented reform in rural China directly created a new economic system, a private property system and a market-oriented economic system on which cooperative organizations rely for existence

Since the reform, rural cooperative organizations have developed in the following two ways: first, the traditional cooperative economic organizations under the People’s Commune system was reformed under the guidance of the government, including reform of the community-based (regional) rural cooperative organizations and reform of the credit cooperative and supply and marketing cooperative system[1][1]; and second, a new type professional cooperative organization was formed by farmers voluntarily with government encouragement.


I. Reform and Development of Rural Community-based Cooperative Organizations

The initial reform of rural community-based cooperative organizations was directly driven by and under the guidance of the government. The more important driving force came from innovation by farmers and from the large-scale implementation of the household contract system.


1. Before the mid- and late 1980s, regional cooperative organizations were established to replace the tranditional People’s Commune system

In 1982, 98.7% of the production teams in rural China implemented the agricultural production responsibility system, and more than 80% of them adopted the household contract system.[2][2] The circular No. 1 issued by the CPC Central Committee in 1984 made clear that in order to improve the system combining unified management and decentralized management, regional cooperative organizations on the basis of public ownership of land should be set up in the rural areas. This notification indicated the way to reform the traditional People’s Commune system. Circular No. 1 (1987) issued by the  CPC Central Committee further set forth that the basic functions of cooperative organizations at township and village levels should be to serve production, to manage and coordinate so as to accumulate assets and exploit resources.

The central government pushed ahead with the building of community-based cooperative organizations featuring the combination of unified and decentralized management and the enabling of this double-level management, aiming, through unified management of the cooperative organization, to solve those problems which farmers themselves could  not solve at all or not solve well, and also to help the fulfillment of government-assigned quotas.. As some comrades pointed out, in the rural areas, the “double-level economy” was formed within the traditional rural collective economy, instead of only “double-level management”[3][3].  That is to say, a household became an independent economic entity, rather than being one level involved in production and sales within the collective economic organization. As an independent entity, having rights for production and sales, households were not confined to doing part of the production and sales activities of collective organizations. Households had more decision-making powers and rights to choose what to do, and many of their activities went beyond activities only on the the land contracted. In addition, by definition, the collective economy is different from the cooperative economy. The fundamental distinction is that under the cooperative economy, the private ownership system is accepted, the private property of farmers is protected and, therefore, the  small-scale production mode is protected, while the purpose of the collective economy was to eliminate private ownership among members, eliminate small-scale production, and make all property collectively owned..

For the above reasons, the regional cooperative organizations featuring the combination of unified management and decentralized management, and enabling double-level management, did not completely break away from the traditional operational mode of the People’s Commune system. Designed and mandatorily imposed by the government, not formed by farmers voluntarily, this kind of organization served no purpose just like the outdated People’s Commune system.


2. In the late 1980s: reform in pilot rural areas launched to introduce the shareholding cooperative system

In 1987, the central government launched a project aimed at creating cooperative organizations and management systems in certain pilot rural areas. Under this project, the reform of cooperative organizations and their basic management system was one of the project’s tasks.  While reforming the community-based cooperative organizations, focus was on sharing out the assets of the collective, defining  property rights and promoting  public accumulation, so as to improve the system of cooperative organizations at county, township and village levels. As a result of lagging reform on the part of local government departments as well as insufficiency of applicable laws, the reform results were not satisfactory. However, rich experience was gained, which proves that a sound legal environment and mature market-oriented economy are important preconditions for the healthy development of cooperative organizations.

At the same time, in the late 1980s,  reform was undertaken voluntarily by some cooperatives, such as the Guangzhou Tianhe Cooperative and the Shenzhen Henggang Cooperative, to introduce the shareholding cooperative system in rural community-based cooperative organizations. This was due to the fact that members of the cooperative organization hoped to share the earnings of the organization[4][4], so as to ensure the transfer of the surplus rural labor force during the urbanization of the rural areas and growing industrialization. With part of collective property of a village’s cooperative organization converted into shares for all the members, the members began partly to enjoy the earning rights of members from the collective property. Under the socialist public ownership system, however, the equity owned by villagers was limited and not full, and they could only enjoy earning rights, but had no rights to sell or disposeof any property, and could not assign, mortgage or even bequeath their shares. Such reform was far from satisfactory to the members. In 1994, the Guangzhou Tianhe Cooperative launched an overall reform. All the collective property was converted into equity for all its members who received dividends according to their shares, and shares could be inherited[5][5]. Thus, the overall shareholding system has become a necessary trend in the reform of community-based cooperative organizations. In addition, the purpose of the reform is not how to provide more services for members, but to ensure their earning rights and transfer rights through the privatization of the assets of the cooperatives.


3. Since 1990: the shareholding cooperative system reform expanded to other areas to introduce the land shareholding cooperative system

From the beginning of the 1990s, the community-based cooperative organizations in Nanhai, Guangdong, introduced a land-based shareholding cooperative system in an overall manner to protect the legal rights and interests of farmers whose land has been requisitioned by the state, and to enable those farmers to enjoy the value-added revenue of the requisitioned farmland. Under this system, the use of the land owned collectively was under an overall plan, and the land was converted into equity so that all the members could achieve the capitalization of the land, promote the reasonable transfer and effective utilization of land resources, reduce the obstacle preventing the transfer of the rural labour force into non-agricultural sectors, and ultimately to accelerate the development of non-agricultural industries.

In the mid- and late 1990s, the land-based shareholding cooperative system reform was deepened in some villages in Nanhai, so implementing a “longlasting fixed equity” system. At the same time, measures were taken to improve the individual rights of members, so that they, while enjoying earning rights, had the rights to dispose of such equity, and could inherit, transfer, donate and mortgage such equity within the community.

Since the beginning of the 21st Century, the collectively-owned economic organizations at village level in southern regions and in the central part of Jiangsu, where the economy was thriving, have launched the reform to introduce the shareholding cooperative system, by learning from the reform experience of cooperative organizations in Guangdong. While liquidating all the operational assets owned collectively except for the land, the focus jas been on quantifying the operational assets of the organization for all the villagers. In individual places such Kunshan, the land-based shareholding cooperative system was introduced. In many places, however, cooperative organizations at village level and villages were usually governed by the same management team, called the Shareholding Cooperative. Thus the reform was far from satisfactory, as the functions of the village committee and the cooperative organization as an enterprise were intermingled.

From the point of view of the development trend, the tranditional community-based cooperative organizations are fading out. Large-size community-based cooperative organizations with considerable strength will be restructured into organizations owned by all the villagers; accordingly, the community-based cooperative organizations will be replaced by village-based companies and groups.

[1][1]This report does not involve the reform of credit cooperatives and supply and marketing cooperatives.

[2][2] Data of the Development of Rural Cooperative Organizations and Conditions for Agricultural Production, compiled by the Rural Cooperation Department of the Ministry of Agriculture, quoted from Reform in Rural China: Review and Prospects, by Chen Xiwen, pp148, Tianjin People’s Press, 1993

[3][3] Reform in Rural China: Review and Prospects, by Chen Xiwen, pp 166-168, Tianjin People’s Press, 1993


[4][4] Refers to Evolution and Obstacles of Property Rights System under the Rural Community-based Shareholding Cooperative System, by Fu Chen, Xuehai, issue 3, 2006

[5][5] Refers to Evolution and Obstacles of Property Rights System under the Rural Community-based Shareholding Cooperative System, by Fu Chen, Xuehai, issue 3, 2006

Copyright: International Committee for the Promotion of Chinese Industrial Cooperatives
Address: Room 206, Library Building, Beijing Bailie University, No. 1 Shuangqing Road, Beijing 100085 CHINA
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