The Chinese Communist leadership decided last week for the first time to allow the farming population, about 800 million people, to sell land-use contracts to other farmers or agricultural companies for more efficient land use and promote the economy of scale, a clear move of “de-communization.”

The global financial crisis has helped Beijing realize it can no longer rely on exports as the engine for economic growth. The only way to maintain strong growth in the midst of global depression is to boost domestic consumption, which could only be done by revitalizing its rural economy.

Beijing has long insisted that the country must remain self-sufficient in the production of staple foods. Now the market for trading farmland is allowed, peasants can gain a new source of cash income to help revitalize the stagnant rural economy.

Since the break-up of massive communal farms three decades ago, individual families have been permitted to farm their land under 30-year government contracts.

The farms are small, however, averaging about 1.66 acres (0.67 hectare) in size, making it hard to run them profitably. (In Hungary and Poland, it’s 15 acres. In the U.S., the average farm is 432 acres).

Under the reform plan, farmers will be allowed to trade, rent or mortgage their land use rights for profit, which they can then use to fund their relocations to cities. The move will speed up the country’s urbanization by bringing more farmers to the cities with the big farm contractors promoting modern farming in rural areas.

Reviving the rural economy is the key to China’s next stage of development. It is both the new focus and the bottleneck of the mainland’s next round of reforms.

On the other hand, the West has adopted socialist measures to save its collapsing financial markets. The U.S. bailing out of the two mortgage finance companies — Fannie Mae and Freddie Mac, and American International Group (AIG) — is a move of “nationalization.” And the Bush administration’s US$700 billion rescue package is a clear step in that direction.

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