As a national leader in collective farming and rural industrialization, Nanjie has revived an age-long ideological debate that recently elevated and placed it under intense criticism from a batch of Neoliberal scholars and media personnel, who distain the idea of rural cooperatives, let alone collectives, and believe privatization is the ultimate solution to China’s rural issues.

Wang Hongbin, Nanjie’s Party chief and a delegate to last month’s plenary session of the Communist Party of China’s Central Committee, considers the October document a “magic pill” for solving issues in Nanjie and other villages alike.

“The fifth part of the document stresses on improving eight types of rural public services. In my understanding, entrepreneurs and the private economy can’t be relied on any of these things. After all, none of the private bosses have truly done much about rural public services,” Wang told China Daily.

“That means we ought to develop the collective economy, which is the foundation to solving ‘Sannong’ problems. Collective economy is the inevitable path,” he added.

“Indeed, Nanjie’s methods may not apply to just any village. I do hope other villages could develop their own methods in relation to their concrete situations and the policy document. But the essence of it all should be to construct the new socialist countryside,” Wang said.

But while he believes “centralism is the best form of democracy; it is nothing like a private boss taking care of business all by themselves”, some of the country’s mainstream scholars and the media are nonetheless convinced that collective ownership is the root of all rural evil, and have tried to make sure that Nanjie’s model not be followed.

The controversy did not start without a cause. Nanjie’s wide-ranging welfare system is founded on collective capital, used to attract migrant laborers, who outnumbered the local residents by 3 to 1 at one point during the late 1990s. The gradual rise in their benefits meant heavy burdens for the village, which, however unwillingly, existed inside a prospering market economy.

To sustain its goal of distributing goods and services according to need, the village committee sought for bank assistance. The Agricultural Bank of China offered the most loans throughout the years. The loans, according to the bank, were the backbone of Nanjie’s egalitarianism.

But when markets crashed in 2004, the village’s dominating food industries could no longer hold on. Nanjie was placed on banks’ blacklists after the village failed to pay loans that year. All bank loans to Nanjie have stopped since then, and the village is on a 1.7 billion yuan (US$ 249 million) debt.

Nanjie was forced to privatize as it sought for listing on the Hong Kong stock exchange. Following legal procedures, 12 local decision-makers were registered as the joint-stock company’s primary stockholders.

On Feb 26, 2008, the Southern Metropolis newspaper published an investigative report after one of its journalists allegedly traveled to Nanjie. The story claimed: “The village collective that boasts billions of yuan in capital is owing more than one billion in debt. Its secretive privatization three years ago meant that the 30-year-old ‘myth’ might have come to an end.”

The report sparked extensive debate on- and offline. Neoliberal scholars and Nanjie supporters alike stood firm to their respective sides. Prominent rural scholar Dang Guoying, a most vocal advocate of rural privatization, took the lead in accusing Wang to be “an extreme leadership-freak and control-freak”, whose “totalitarian communal ambition” is doomed to result in failure, as the report had discovered. 

“If thousands more of Wang Hongbin continue to prosper in China, then China’s future will be dimmed! I neither hope nor believe that’s going to be the case,” Dang wrote.

Southern Metropolis soon echoed Dang’s critique by carrying an article by its columnist Lian Yue, who said: “It’s only after the money support faded that we found out Nanjie has no underwear on… I hope it can collapse slowly and take its time to die.”

News of Nanjie’s “bankruptcy”, which flooded the mainstream media, met significant online speculations. Netizens questioned the report’s reliability, while arguing that the criticizers were all too “essentialist and reductionist” on the issue. The degree to which these academic practitioners felt displeased with Nanjie’s indigenous development, netizens assert, is inappropriate.

The few intellectuals who are actively involved in rural affairs and peasant self-governance, in comparison, tried to present a more balanced view.

For Wen Tiejun, Dean of Renmin University’s School of Agricultural Economics and Rural Development and director of the James Yen Rural Construction Institute: “The Nanjie collective mode of economy was an incidental choice as rural China industrialized. There is no way to determine the inevitability of this mode.”

“Industrialization necessitates the scaled concentration of resources in the form of capital. Nanjie did so by collectivizing community resources, using Mao Zedong Thought as a tool for mobilization,” he observed.

Scholar and former rural cadre Li Changping, who is accredited with coining together and popularizing the term “Sannong problems”, said: “Some people ask why Nanjie isn’t dead. If a countless number of villages that rely on benefits from agricultural land rents is still holding up, how can the 7,000 “organized modern villages” that engage in not just that, but also share added values from non-agricultural land rents and benefits from land capitalization, be bankrupt so easily?”

“Nanjie doesn’t have a very good system, but it is well developed because its relations of production are superior to the household responsibility system, and are on par with the level of productivity there,” Li said.

Amidst fierce debates and growing controversy, Nanjie has remained surprisingly silent – at least to outsiders.

In a written statement released to – but rarely seen on – the media, Wang said the privatization in 2004 was a result of mere legal compliance, and has had no effect on Nanjie’s management and distribution structures. None of the 12 shareholders, he said, has received a cent of shares.

According to him, despite the 1.7 billion yuan debt, Nanjie’s net assets still total 900 million yuan. As such, the village is “nowhere near” bankruptcy.

Wang acknowledged that 2004 was Nanjie’s worst year, when its 26 firms had a total of only 20 million yuan of circulating fund. Local residents had to pool their limited savings together to sustain the village collective. Today, the companies’ circulating fund is at more than 60 million yuan.

“The reality is, the Nanjie economy is experiencing a turnaround while the world is in a financial crisis… we’ve recovering through our own effort,” Wang said.

“Like the policy document and the top leaders have said, the two reasons behind China’s remarkable handling of this year’s great events and difficulties are the Party leadership and the socialist system. That’s what we’ve learned, too,” he said.

“In the face of similar economic and ideological tests, private bosses would have packed up and run away, leaving behind a collapsed company and hungry employees. That didn’t happen in Nanjie,” Wang said.

The villagers – residents and migrant workers alike – tended to agree.

Cheng Huajie, chief of the Nanjie Kindergarten, said: “Life here is like a pair of shoes. You’d never know it’s comfortable or not unless you try it on.” Her village kindergarten is the largest in Luohe city and a provincial model. About 720 of the 870 children enlisted are from outside Nanjie. 

“Seriously, just look at me. I take great pride in my job here. I graduated from Zhengzhou (Henan’s capital city) and decided to settle down here because it’s got this enormous confidence,” she said.

“Nobody locks their doors around here. I don’t either. I hardly even take my keys with me. There are even times when I leave hundreds of kids in here, doors open, for errands in town, without having to worry about their safety,” she added.

“This place is under the sun. There’s not much darkness,” said Cheng, who stressed that Nanjie’s cadres are “fish in a fishpond”. “People watch them all the time,” she noted.

“We go our way and let others talk. What else can they do? Say, how much do housing, school and healthcare cost in Beijing, and how many banks and companies are truly bankrupt now?”

Chao Weiyong, director of Nanjie’s TV station, said it’s better to keep a low profile against media distortion: “We wouldn’t care less about these smears. Yes they’ve destroyed our image. But we’ve managed to come this far. The villagers all know in their heart what’s true and what’s not.”

“The Southern Metropolis report said when former village chief Wang Jinzhong died in 2003, more than 20 million yuan of cash was found in his safe. Now just how large a safe would that be?” he asked.

“It’d just be stupid to get into a fight with these people. It’s not worth it… There are some genuine problems in Nanjie. But could you point me to a place that doesn’t have a problem?”

“Sannong” problems, or problems confronting China’s agriculture, countryside and peasants, have been the buzzword behind the top leadership’s focus on rural issues in recent years. The term stemmed from Li, who in 2000 petitioned then-Premier Zhu Rongji in a famous open letter that complained: “the farmers’ life is hard, the villages are poverty-stricken, and agriculture is in crisis”.

NANJIECUN, Henan: Unlike most farmers who toil in the field for a living, Zhao Minsheng more or less works the land for fun. He doesn't work for himself, has no fixed land to grow crops or fall back on, but gets a steady 400-yuan (US$ 59) monthly income all the same.

The 60-year-old leads a team of 22 co-workers in Nanjie, a village at the heart of Central China’s Henan province. Re-collectivized farmland has allowed agriculture here to soar on a pair each of corn and wheat harvesting equipments. It is through them that the 22 local villagers, mostly male and with an average age of 55, work on 600 mu of land. They draw in 800,000 yuan (US$ 117,165) every year, with an output of 900 kg of crops per mu.

But those aren’t the only differences between villagers in Nanjie and those elsewhere. Nanjie farmers refer to themselves as “farm workers”. They work the land as a collective, give all farming income to the village and receive free housing, healthcare, water, electricity and heating in return.

Such welfare has allowed Sun Fu’an to leave work after overseeing Nanjie’s animal farm for a decade. But since there is no retirement system in the village, he is not retired. In his own words: “I was just tired of breeding, and am too old to work in the village firms like our children.”

In Nanjie, only 22 male residents, with an average age of 55, engage in farm work, while the younger people work in the village’s 26 firms, mostly making and selling instant noodles, flour, spices, chocolate bars, beer, liquor and medicine.

Nanjie is different from other villages – different even upon first sight. It wakes up to the tune of “the East is Red” at 6:15 am, greets its workers with “Sailing the Seas Depends on the Helmsman” around noon, and sends them home when “Socialism is Good” is played at the broadcast station at 5 pm. At the village center is a 6m-tall statue of Chairman Mao, guarded by local militia at all times and flanked by portraits of Marx, Engels, Lenin and Stalin.

At every turn, from apartment homes, village schools, shopping area to factory workshops, residents as well as visitors cannot help but read the various traditional and contemporary moral teachings in huge characters plastered on the walls.

But the village embodies much more than utopian nostalgia. Thirty years into the reforms, and at a time of crippling free markets and soaring rural cooperatives, Nanjie remains a leading name among the 7,000 to 10,000 villages in China that have held onto, or readapted, the collective model.

Quite a few villages in Henan have replicated Nanjie’s model. Even leaders from Anhui province’s Xiaogang village, the famed “birthplace of the reform”, have paid a number of visits to Nanjie and left words of endorsement and admiration in its museum guestbook. The words from Xiaogang Party chief Shen Hao were: “(We will) learn from Nanjie, strengthen the collective economy and proceed towards common prosperity.”

Nanjie is home to and provides free housing, cradle-to-grave healthcare and education for about 3,200 residents and another more than 3,000 migrant workers who have received “honorary resident” titles.

Villager Liu Gaimin’s story mirrors most of her kind in Nanjie. The 67-year-old came to the village when she married in 1962, and suffered through decades of hardship. For years she regretted marrying wrong. “There was no decent thing to eat, no decent water to drink and no decent place to live… a big rain outside the house meant a small rain in it,” she recalled.

Along with the rest of rural China, Nanjie dismantled its communes in 1983. The household responsibility system was adapted, and two factories were set up. But it wasn’t long before the firms declared bankruptcy, and their bosses ran away with the villagers’ money.

In 1986, the village committee regained the companies’ assets, and called upon those who were unable to use their allocated farmland to return them to the village collective for others to work on. Liu’s family, who had five mu, was among the first to do so. Others gradually followed suit. By 1990, the collective was able to gather all of the village’s 1,000 mu of farmland.

With village companies and other property returned to the community, Nanjie began to offer welfare to its residents, first free water and electricity, then coal, natural gas, meat, eggs and flour, and finally education. By the early 1990s, Nanjie had completed a welfare system, in which even agricultural taxes and medical expenses were paid for by the village collectively.

Construction for apartment buildings began in 1991. Liu moved into a three-bedroom suite two years later, and became a factory worker until 2004.

“I’m just an ordinary farmer. I’ll be grateful all my life to these village cadres who have helped us get to where we are now... this happy life of ours now didn’t come easy, really,” she said.

Like all Nanjie villagers, Liu is entitled to 15 kg of flour and 60 yuan of welfare tickets per month. She no longer works, but still earns 200-300 yuan a month for hosting daily visits as part of the village tourism company’s field experience programs.

Visitors began to swarm Nanjie since the 1990s, but it wasn’t until 2004, when the village was suffering its worst year yet economically, that local decision-makers started a tourism company that charges for random home visits and sightseeing tours.

Almost all of the company’s employees are from outside the village. Ni Yandi, 22, is among them. Long been attracted to Nanjie’s name, the town girl came to the village to apply for work after high school in 2004. The new tourism firm offered a job and assigned her a dormitory.

“It’s actually very nice working here. I don’t have to think as much; most things are taken care of,” she said. “It’s a messy world out there.”

To some extent, Nanjie’s economy relies on the 6,000 migrant workers like her, who have come to – and many settled down in – the village, while millions of rural youths around the country throng the cities for work. These migrant workers – an overwhelming number of them women – are mostly employed in the village’s factories, restaurants, museum, hotel and the tourism company.

Some key local positions, too, are occupied by people from the outside. Sheng Ganyu, director of the weekly Nanjiecun News, is an example. Having spent 12 years in Nanjie, Sheng, also responsible for dealing with the media, knows all of journalism’s “dirty tricks” and feels proud of his experience here. The pride, he says, is not related with the fact that his cellphone and phone expenses are all paid for by the village collective.

“The amazing thing about Nanjie is, it’s a village that is home to about 600 people who have gone to or are still in college. Of these, 30 people have graduate degrees, and one of them has a doctorate,” Sheng said.

“The village provides tuition fees and travel expenses for every one of them, but never forces any of them to come back. People come back only if they want to; there’s no obligation attached whatsoever,” he added.

“Now how many villages have that kind of confidence?”

The Li siblings have come back for the most realistic reasons – a good pay, with lots of welfare, at home. Li Chongyang, the younger sister, just graduated from northeastern China’s Shenyang Pharmaceutical University this summer and works at the village’s pharmaceutical firm. She earns 800 yuan a month. The village paid all her tuition, which totaled more than 6,000 yuan in freshman year and about 5,000 yuan for each of the remaining three years.

“There’s no place like home,” Chongyang said. “My classmates all envied me throughout college… the money the village gives you is like the money your parents give you.”

“And hey, I don’t feel much of a difference between here and Shenyang. At least in terms of standards of living and transportation, we aren’t anything beneath Shenyang,” she said.

Chongyang is among the five Nanjie youths who went to the Shenyang Pharmaceutical University in 2004. All but one are now back in the village.

Her elder brother Li Yanfu, too, came back after receiving a diploma from the Beijing Printing Institute two years ago. An employee with the Sino-Japanese joint venture Naikeda color-printing firm, Yanfu just married in an annual group wedding this Oct 1. He is assigned a new two-bedroom apartment, to which he will move from his parents’ place shortly.

But unlike most senior-aged residents, the young man said whether he would stay in the village forever depends. “Right now, I’m here because there’s not much pressure, and I can learn things just like if I were outside the village. And I figure it’s time I do some payback for Nanjie.”

Local villagers watch the standard 42 channels, including the Nanjie channel that airs a 30-minute program every Saturday night, on their home TV. Most of them are Internet surfers, curious about the world outside as much as it is about them. They observe current affairs – the financial turmoil, social crises and rural crimes – with much interest and pity in how the world has become.

Very few, though, have learned of the recent farmland reform. After all, the village has come so far that its younger generation has little sense of land – as do rural youngsters elsewhere. But unlike most other villages, farm workers in Nanjie aren’t afraid that their children will sell the land one day when policy allows. Chongyang’s instant reaction to the news gives some insight: “What, land? We’ve been working the land together forever.”

Wen Tiejun, rural scholar

The Nanjie collective mode of economy was an incidental choice as rural China industrialized. There is no way to determine the inevitability of this mode. Industrialization necessitates the scaled concentration of resources in the form of capital. Nanjie did so by collectivizing community resources, using Mao Zedong Thought as a tool for mobilization.

Li Changping, rural scholar

Some people ask why Nanjie isn’t dead. If a countless number of villages that rely on benefits from agricultural land rents is holding up, how can the 7,000 “organized modern villages” that engage in not just that, but also share added values from non-agricultural land rents and benefits from land capitalization, be bankrupt so easily?

Nanjie doesn’t have a very good system, but it is well developed because its relations of production are superior to the household responsibility system, and are on par with the level of productivity there.

Liang Langtian, student, Renmin University’s School of Agricultural Economic and Rural Development

The collective path is the inevitable path in China’s rural development.

Dang Guoying, rural scholar

Wang Hongbin represents a group of people who are extreme leadership-freaks and control-freaks… if thousands more of Wang Hongbin continue to prosper in China, then China’s future will be dimmed! I neither hope nor believe that’s going to be the case.

Lian Yue, Southern Metropolis columnist

It’s only after the money support faded that we found out Nanjie has no underwear on… I hope it can collapse slowly and take its time to die.

Mere Wagalala (Fiji Islands), visitor

This is a good role model but it needs very committed leaders. It is like the Kibbutz system in Israel and I hope it will continue.

Edmund Qpokil-Agyeman (Ghana), visitor

This is a wonderful testimony to the results of committed people-centered leadership. It is an example for all developing countries committed to the principle of people participation in development.

Fantastic!

Nanjie doesn’t offer answers to all rural issues. It has its own share of problems, which earlier media reports argued had already led to the village’s “bankruptcy” without the residents’ knowing.

The village’s wide-ranging welfare system is founded on collective capital, used to attract migrant laborers who massively outnumber the local residents. At one point during the late 1990s, Nanjie had more than 10,000 migrant workers. The gradual raise in their benefits meant heavy burdens for the village, which, however unwillingly, existed inside a prospering market economy.

To sustain its goal of distributing goods and services according to need, the village committee sought for bank assistance. The Agricultural Bank of China offered the most loans throughout the years. The loans, according to the bank, were the backbone of Nanjie’s egalitarianism.

But when markets crashed in 2004, the village’s dominating food industries could no longer hold on. Nanjie was placed on banks’ blacklists after the village failed to pay loans that year. All bank loans to Nanjie have stopped since then, and the village is on a 1.7 billion yuan (US$ 249 million) debt.

Nanjie was forced to privatize as it sought for listing on the Hong Kong stock exchange. Following legal procedures, 12 local decision-makers were registered as the joint-stock company’s primary stockholders.

On Feb 26, 2008, the Southern Metropolis newspaper published an investigative report after one of its journalists allegedly traveled to Nanjie. The story claimed: “The village collective that boasts billions of yuan in capital is owing more than a billion in debt. Its secretive privatization three years ago meant that the 30-year-old ‘myth’ may have come to an end.”

The report sparked extensive debate on- and offline. Neoliberal scholars and Nanjie supporters alike stood firm to their respective sides, while the villagers themselves remained silent – at least to outsiders.

In a written statement released to – but rarely seen on – the media, village Party chief Wang Hongbin said the privatization was a result of mere legal compliance, and has had no effect on Nanjie’s management and distribution structures. None of the 12 shareholders, he said, has received a cent of shares.

According to him, despite the 1.7 billion yuan debt, Nanjie’s net assets still total 900 million yuan. As such, the village is “no where” near bankruptcy.

In an interview with China Daily, Wang said 2004 was Nanjie’s worst year, when its 26 firms had a total of only 20 million yuan of circulating fund. Local residents had to gather their limited savings to the village collective. Today, the companies’ circulating fund is at more than 60 million yuan.

“The reality is, the Nanjie economy is experiencing a turnaround while the world is in a financial crisis… we’ve recovering through our own effort,” Wang said.

“Like the policy document and the top leaders have said, the two reasons behind China’s remarkable handling of this year’s great events and difficulties are the Party leadership and the socialist system. That’s what we’ve learned, too,” he said.

“In face of similar economic and ideological tests, private bosses would have packed up and run away, leaving behind a collapsed company and hungry employees. That didn’t happen in Nanjie,” Wang said.

The villagers – residents and migrant workers alike – tended to agree.

“When I’m on a conference somewhere and tell others that I’m from Nanjie, people would look at me as if I’m a monster from another planet,” complained Cheng Huajie, chief of the Nanjie Kindergarten. “So I recently just tell people I’m from Luohe (the city to which Nanjie belongs).”

“Life here is like a pair of shoes. You’d never know it’s comfortable or not unless you try it on,” the migrant worker said. Her village kindergarten is the largest in Luohe city and a provincial model. About 720 of the 820 children enlisted are from outside Nanjie.

“Seriously, just look at me. I take great pride in my job here. I graduated from Zhengzhou (Henan’s capital city) and decided to settle down here because it’s got this enormous confidence,” she said.

“Nobody locks their doors around here. I don’t either. I hardly even take my keys with me. There are even times when I leave hundreds of kids in here, doors open, for errands in town, without having to worry about their safety,” she added.

“This place is under the sun. There’s not much darkness,” said Cheng, who stressed that Nanjie’s cadres are “fish in a fishpond”. “People watch them all the time,” she noted.

“We go our way and let others talk. What else can they do? Say, how much do housing, school and healthcare cost in Beijing, and how many banks and companies are truly bankrupt now?”

Chao Weiyong, director of Nanjie’s TV station, said it’s better to keep a low profile even in face of media distortion: “You know, we wouldn’t care less about these smears. Yes they’ve destroyed our image. But we’ve managed to come this far. The villagers all know in their heart what’s true and what’s not.”

“The Southern Metropolis report said when former village chief Wang Jinzhong died in 2003, more than 20 million yuan of cash was found in his safe. Now just how large a safe would that be?” he asked.

“It’d just be stupid to get into a fight with these people. It’s not worth it… There are some problems in Nanjie. But could you point me to a place that doesn’t have a problem?”