Revolutionizing Rural China: Shareholding Reforms as a Catalyst for Economic Empowerment

by Guest Contributor | Nov 17, 2023 | Opinion

China’s ongoing rural reforms are fostering practices akin to basic income, offering dividends to residents in the vast countryside. This development draws a parallel to the broader discussion of basic income within the context of China’s social security system and policies, such as the DiBao policy.

Since 2016, China has embarked on a reform of its rural collective property rights system. This reform, which involves a unified method of property verification by the central government, has enabled many villages across the country to establish clear ownership of assets. This foundational step has set the stage for the distribution of dividends.

The reform involves transforming collective operating assets into a shareholding cooperation system. The government mandates that villages and towns with these assets quantify them into shares for collective members, allowing for the distribution of earnings based on these shares. This approach leverages China’s collective economic base and equitably allocates previously undefined collective property to each member. Consequently, villagers now own shares and receive dividends, significantly enhancing their sense of financial gain.

However, these dividends differ from the traditional concept of basic income. They are conditional, require ownership in the collective, and do not necessarily follow a regular payment schedule. Despite these differences, the reforms have led to innovative institutional experiments across various pilot projects.

For instance, to include permanent residents and workers without shares in dividend distribution, some collectives have introduced new types of shares such as labor, land, and capital shares. This diversification enables broader participation, aligning more closely with the unconditional principle of basic income.

In terms of periodic distribution, some village groups, like Yongjiang Street in Ningbo, Zhejiang Province, have moved from lump-sum to regular payments. This approach, now increasingly adopted by local cooperatives, ensures more consistent financial support for members.

The impact of these reforms is tangible. In Beijing’s Haidian district, for example, villagers like Zhong Ercui have transitioned from traditional employment to becoming shareholders and employees of village collectives, receiving substantial dividends. This shift has significantly improved the economic conditions of thousands of residents in the region.

These reforms represent a significant step in China’s rural development, blending traditional collective economic practices with modern principles of equitable asset distribution and financial empowerment for rural residents.

Written by: Martin Han
Editor: Tyler Prochazka