Chinese farmers now have a legal right to form economic co-operatives thanks to a recently passed law.
“It gives a new path for farmers,” said Men Wei, a Chinese government legal analyst.
The legislation, passed into law in November, allows China’s 300 million farmers to form co-ops that can be registered as legal entities with the government.
The main parts of the legislation will promote the development of new co-ops, protect co-op members’ rights and confirm basic co-operative principles, Wei said during a presentation at the University of Saskatchewan’s Centre for the Study of Co-operatives.
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“This is the first time since the communist regime came (to power) in 1949 that co-operatives have been officially recognized,” said Murray
Fulton, a University of Saskatchewan agricultural economics professor.
Farmers in China began to organize co-ops in the 1990s, even though they had no legal right to do so, Fulton said. The recent legislation is “giving them legal status, which is saying that the government recognizes this is a legitimate form of organization and business.”
Fulton said studies around the world confirm that having legal status is important for co-operatives to get off the ground. It means they can enter into contracts with other organizations and take out loans.
And because of limits on liability, members of the co-op are protected in the event of bankruptcy.
But aside from the economic aspects, Fulton said there is also a political consequence in the new legislation.
“China has been reluctant to allow groups to form outside of the (Communist) Party,” Fulton said.
As China moves toward a market-based economy, it is significant that the government will allow Chinese farmers to join together for their economic benefit, he said.
Wei said the Chinese law guarantees the principles of voluntary association and democratic control of the co-op. But under the law, farmer co-operatives are not required to adopt all internationally recognized co-op principles.
Wei said the principle that co-operatives work for the sustainable development of their communities is not a requirement to becoming a registered co-op.
“That means that we do not want farmer co-operatives to (have) to do (too) many things. (Co-ops are) a new entity and the farmers want … to earn money, to have more income,” she said.
“It doesn’t mean that a co-operative can’t do something concerning the community. They can do if they like, and most of them do,” she said.
The law also encourages various levels of government to assist farmers who want help in starting a co-operative.
Government officials are prohibited from participating in the running of a co-operative, Wei said.
