Haotang Village: Don’t Sell the Farm

For a long time， one major concept of China’s rural con- struction remained to “enable farmers comparable quality of life with urbanites.” However， with China’s rapid urbanization， increasing numbers of people are beginning to cherish their rural memories， and fantasize about returning to tradition， simple rural life， and unsophisticated countryside folk customs. Due to this trend， Haotang， a small village in Xinyang of Henan Province， has attracted massive attention. With a built-in financial mechanism， Haotang gradually formed a mutual-assistance system among villagers which has become well-known among China’s various rural construction projects. In many opinions， Haotang has successfully restored the classical state of rural areas.

Built-in Financial Mechanism

With an area of more than 20 square kilometers， Haotang is home to 650 families totaling more than 2，000 people. Just a few years ago， it hardly differed from most Chinese villages： withering and run-down. Almost half of its labor force had left for metropolises to work， leaving behind mostly the elderly and children.

Change began happening in 2009. At that time， Li Changping， head of the NGO Design Institute for China Rural Construction and an expert on research issues concerning agriculture， rural areas and farmers， was invited to Xinyang to lecture. Xinyang’s Pingqiao District， which administers Haotang， was already an experimental zone for rural construction in Henan Province. Li is an expert of rural construction theory and practice， and the local government was eager to find a village for experimental rural construction – the two parties seemed made for each other.

In October 2009， Haotang’s Rural Loan Association for Senior Citizens was established. This rural loan association is what Li dubbed the built-in financial mechanism， which helped money from villagers to be used on villagers.

At its launch， the association raised start-up capital of 340，000 yuan： Each of 15 senior citizens paid 2，000 yuan for a share in the association， and the remaining funds came from donations from the district government， Li Changping， and seven active and supportive wealthier villagers.

Li believes that in China’s current circumstances， a new financial model needs to be established in rural areas or amongst farmers， enabling them to mortgage or transfer property such as land， forests， or housing at will in order to receive funds. In terms of the rural loan association in Haotang， it is a typical mutual fund which supports the elderly. Along with raising money， Li hopes that by establishing the built-in financial mechanism， more locals will be inspired to participate in the village’s rural construction and play more active roles.

Villagers in the association discussed and made almost every major decision internally， such as deposit and loan interest rates and methods to reduce loan risk. The debates， or more accurately“fights”， lasted two days before villagers finally settled every rule and regulation.

Already， the first 15 seniors to join the association have received dividends that exceed their initial 2，000 yuan by a wide margin. By 2013， 80 percent of seniors in the village had joined the association.

Young people can also get loans from the association. Risk is minimized because families are familiar with each other across generations. If a villager defaults on a loan， the deed to the land signed off as collateral will transfer to others in the village. For banks， rural property as collateral is harder to liquidate and carries considerably less value. But for people living in the village， the property maintains far more value. Thus， the association hasn’t even seen one default since its establishment.

Mutual-assistance System within the Rural Community

During rural construction， Haotang encountered the same problems as most villages in China： From where could they get the money and land they needed？

Haotang was comparatively ambitious. In 2011， the village set up the Luyuan Ecological Tourism Development Company， with the village head as its legal representative. All land transfers in the village must be handled by the company， and if outsiders want to rent Haotang’s land， they also need to go through the company.

The company purchased more than 20 hectares of land from villagers， which were used for public facilities such as a school， a center for the elderly， a teahouse and a library. These projects were not cheap. Where did the village get the money？ The loan association again played a major role. Luyuan Company was granted a 1.6-million-yuan loan from the association to cover land acquisition costs， which laid the foundation for continuation of every other project. The company has already repaid its loans in full. It leased about 5.4 hectares of land acquired from locals to five businessmen from Xinyang City for a 60-year term， at a price higher than they paid for the purchase， which is how the company repaid the loans.

Villagers were willing to lose some land to make the deal happen because they knew it would bring new economic opportunities. Some village officials were particularly frank： “If not for the promise of tangible benefits， villagers won’t cooperate at all， even just relocating a pigsty or tearing down a small section of a fence.”

These benefits were obvious. After Haotang’s renovation， it became a more agreeable and relaxing destination for urbanites. Every weekend， several hundred tourists visit the village. Greater job opportunities were created， and more than 100 young people who previously worked in metropolises returned. By operating family hotels and selling agricultural products， many households have witnessed steep income increases， some as much as double.

“Constructing Rural Areas More Like Rural Areas”

Li expects Haotang to end up in the rural service industry in the future. “It will become a place the elderly can call home，”he predicts. “In this way， not only will we solve the elderly care problems， but also provide employment opportunities and enhance agricultural development. The costs will be low and benefits high.”

“During China’s rapid urbanization， many villages disappeared because people moved to cities，” he adds. In his eyes， reconstruction of Haotang highlights its unique personality， launching its comeback.

Li believes that the experiment in Haotang， in a way， is exploring methods to rescue all of China’s villages. During the country’s industrialization process， 10 percent of villages will become cities and towns， 60 percent of villages will disappear， and the remaining 30 percent are worthy of protection. “We should protect the 30 percent， and keep these villages villages，” says Li.

China Pictorial （CP）： In terms of the Haotang project， what was the biggest challenge you faced？ How did you overcome it？

Li Changping （Li）： To be precise， I think we should call the project a “rural community reconstruction and comprehensive development experiment.” In the olden days， clans and families were the main bodies of a village’s self-governance. After 1949， the Communist Party of China assigned the “rural community”the lead role for villages’ self-governance. The basic features of a rural community are distinct： It possesses “four rights，” namely， the right to real estate， finance， governing and management within the village， and “three functions”： developing the economy， community construction， and community management.

The biggest challenge facing Haotang was that we couldn’t build a rural community preserving the four rights using methods from the planned economy era. We needed methods compatible with a market economy. Our major solution was the built-in financial mechanism. In short， through financial innovation， we promote innovation in the land system and village organization， which further accelerates the village’s comprehensive development.

CP： In your opinion， what has been the most constructive or creative measure of the Haotang project？

Li： The built-in financial mechanism， which enables residents to mortgage land within the village.

CP： What are the roles of project designers such as yourself in relation to that of local residents of Haotang？

Li： Actually， the Haotang experiment is only one piece of comprehensive rural reform in Xinyang. Individuals and institutions including myself， the Design Institute for China Rural Construction， Beijing Green Cross， and China Rural Construction Service Center， are only contributors. Local farmers and the rural community itself are the real lead roles.

Whether or not the Haotang rural community can develop， construct， and manage itself is very important for the success of the Haotang project.

CP： Nowadays， many rural reconstruction projects launched by government emphasize building modern urban civilization in rural areas. However， Haotang attaches more importance to restoring rural civilization and striving to make rural areas more rural. What’s your understanding of these starkly contrasting philosophies？

Li： China’s rural areas and agricultural civilization conform to the concept of an ecological civilization and value sustainable development. When urbanization reaches a certain level， counterurbanization will emerge. Within the counterurbanization trend， agriculture， rural civilization and the environment will receive increased consumption value and management value. Thus， it is necessary to “make rural areas more rural.”