Investment opportunities from China’s Rural Revitalisation strategy 

China’s Rural Revitalisation Strategy is a core component of the government’s goal to promote more balanced economic and social development. China Briefing looks at the key investment and business opportunities for foreign companies that are aligned with the goals of China’s Rural Revitalisation programme

When China adopted market reforms and opened to the global economy in the late 1970s and 1980s, then-leader Deng Xiaoping famously said that the Party would need to “let some people get rich first.” This referred not only to the east coast regions at the forefront of economic reform, but also urban areas at the expense of rural ones.

Since then, many rural areas have suffered from issues like environmental degradation and brain drain, in addition to benefiting less from the fruits of China’s economic reforms. Inequality between urban and rural areas is increasing, with incomes of urban residents about 2.65 times higher than the income of rural residents.

In this context, the Rural Revitalisation Strategy aims to address issues such as economic and social development, poverty alleviation and environmental protection. Moreover, as rural revitalisation becomes increasingly important for the Chinese government, opportunities for foreign investors to participate in the policy’s priority areas are also expanding.

What are the goals of China’s Rural Revitalisation Strategy?

Chinese President Xi Jinping first introduced the Rural Revitalisation Strategy at the 19th Party Congress in 2017 to emphasise the importance of developing rural areas. The strategy has two long-term goals: to achieve “decisive progress on rural revitalisation” by 2035, and be “fully rejuvenated with well-off farmers and strong agriculture sectors” by 2050. To achieve these goals, the Rural Revitalisation Strategy emphasises policies such as encouraging small-scale farmers to adopt modern farming practices, improving the property rights of farmers and requiring governments to repair environmental degradation.

In February 2022, the State Council and the Central Committee of the Communist Party set out rural plans for the year. This year’s plan has three main themes: addressing social issues such as treatment of women and children, ensuring food security, and avoiding backslides in poverty alleviation. 

Addressing extreme poverty and income inequality

The Rural Revitalisation Strategy is closely related to the new Common Prosperity policy, which seeks to achieve more equitable development and provision of social goods, and the drive to eliminate extreme poverty, which Xi said China accomplished in 2020.

While China claims to have eliminated extreme poverty, achieving sustainable poverty alleviation remains an objective of rural revitalisation. The Chinese government defines extreme poverty as an income of about US$1.69 (approx £1.29 per day), compared to the World Bank’s standard of US$1.90 (£1.45) per day. According to Premier Li Keqiang, around 600 million people in China earn an average of RMB 1,000 (£120) per month.

These figures show that, even if China has met the threshold of eliminating extreme poverty, there is a significant need to continue efforts to sustainably eradicate poverty and aid the hundreds of millions of people in China on low incomes.

What opportunities does the Rural Revitalisation Strategy offer foreign businesses?

The Rural Revitalisation Strategy’s investments and incentives create opportunities for foreign companies to participate in the project and contribute to its varied goals.

Agricultural technology

One of the main facets of the Rural Revitalisation Strategy is the upgrading of agricultural technology and machinery, both among small-scale farmers and the agricultural sector more broadly. This demand combined with advancements in the industry has led experts to project that China’s digital agricultural economy could grow from about RMB 600 billion (£72.4 billion) in 2021 to RMB 1.2 trillion (£144.9 billion) by 2025.

In addition to upgrading the quality and efficiency of farming, rural areas are in need of green agricultural technologies that reduce greenhouse gas emissions. The Chinese government has committed to hitting peak carbon emissions before 2030 and to becoming carbon neutral before 2060. Because agriculture is one of the largest contributors to carbon emissions and one of the sectors most vulnerable to climate change, China’s adoption of new agricultural technology in rural areas will need to prioritise environmental considerations.

Food security

Food security was one of the central concerns of this year’s Document No. 1. With a population of 1.4 billion people with growing consumption demands, food security has long been a concern for the Chinese government. These concerns have only grown more pressing in recent years, with issues like the swine flu, international trade disputes and floods all revealing the precariousness of food supplies.

To strengthen food security, Document No. 1 calls for greater production of key crops. This could mean expanded opportunities for foreign agricultural biotech products, such as seeds. While at times difficult to navigate, the Biosecurity Law of China does allow for foreign participation in the sector.

In addition to expanding domestic production, China is seeking to diversify its sourcing of key agricultural products like soybeans to mitigate trade risks. Producers of agricultural products worldwide may therefore find new opportunities to trade with China, especially with products that China is currently dependent on a small number of countries for.

Environmental repair and waste management

Many of China’s rural areas are in need of treatment to reverse environmental degradation that has occurred over the last three decades of rapid economic growth. Issues range from water contamination to soil revitalisation to waste management and various other forms of pollution. Products that meet these demands include water purification systems, advanced recycling technology and soil contamination treatment products.

According to the US International Trade Administration, the environmental technologies market in China is worth over £59 billion. Because environmental technologies come at the confluence of social needs and demand for foreign technology and expertise, many environment-related industries are encouraged under China’s Catalogue of Industries for Promoting Foreign Direct Investment.

A version of this article was first published by China Briefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world.