Beijing, October 13:

Thirty years after first setting out on the capitalist road, China’s ruling Communist party has approved bold proposals that aim to liberate 700 million peasants from their state-owned land.

The plans, passed yesterday at a plenary session of the party’s central committee, will allow farmers to exchange their plots of land or use the sites as collateral for loans. Experts are hoping the measures will boost rural incomes, improve productivity and help households

raise money required for individuals to get access to cities.

As the world economy tumbles into recession, the government appears anxious to ease its dependence on export trade by strengthening domestic demand. Spreading the wealth to the countryside, officials say, will allow farmers to buy more consumer goods; it will also free up resources for spending on rural health and education.

Legislators are hoping that the new measures will improve productivity and meet growing urban food demand. That, in turn, will help head off surging food prices. China’s peasantry makes up more than 55 per cent of the total population.

Meanwhile, the gap between the urban rich and the rural poor has continued to widen. Latest official statistics show per capita city incomes are 3.3 times higher than those in the countryside, the biggest since reforms began in 1978.

As China shifts inexorably towards the ‘socialist market’, the Communist party continues to try to reconcile the requirements of capitalism with the shibboleths of its Maoist past, and government experts have rejected talk of ‘privatisation’.

The proposals will not formally break with the principles of collectivisation. Land will continue to belong to the state, but the ‘leases’ that were introduced by reformers in 1978 could now be lengthened to 70 years, giving farmers far greater freedom over what to do with the land.

Observers say the development will mark a full break from the ‘semi-feudal’ past by freeing farmers from the grass-roots party committees.