Monday, October 27, 2008

China's Agricultural Revolution

The significance of the recent decision by the Central Government to allow farmers to "lease their contracted farmland or transfer their land use rights" has been under estimated by Western observers. China's agricultural sector is underdeveloped with small acreages, poorly mechanised and beset by local "official" interference. The reforms will dramaticaly boost the scale of farm production. Large companies, including Australian know how will aggregate holdings and begin modern large scale operations. Sure it will take some time for the economic benefits to flow and there will be a rural labour force which needs to be employed in the mean time.That is precisely why the Central Government has also announced a massive $US292 billion injection into building what will be the best rail system in the world. China found its way out of the Asian melt down by building roads (the capacity of which still outstrips demand) now the rail system. The projects will be a massive source of employment and will be built in time to bolster recovery and support China's developing tourism trade. To the outsider it sometimes looks as if China makes dis-connected policy statements but that is to seriously mis-read the Goverment's intentions.There is a plan...join the dots and don't be too gloomy about Australia's resource exports!
Railway's = iron ore...rolling etc.

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