Beijing aims to manage, rather than halt, rural migration which it accepts is important for economic growth. However, a report yesterday by the Organisation for Economic Co-operation and Development argues that China can target policies more effectively and in economically less distortive ways. Its recommendations include further encouragement of labour-intensive production that also yields high labour productivity, better market information, more research and development funding, lower barriers to internal trade and less reliance on costly and inefficient price supports.
More controversially, but rightly, the OECD urges faster reform of the hukou population registration system, which constrains personal freedom and severely restricts labour mobility, and of land tenure rules. But it stops short of calling for farmers to be granted freehold rights to land, instead of being able only to lease it. Such a step would protect them from forced dispossession, endow them with marketable assets and promote consolidation of holdings into larger, more commercial units.
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