1. Introduction
Since the adoption of its reform and opening-up policy in 1978, China has experienced significant economic development, leading to substantial changes in its economic and social structures. Along with economic prosperity, China has observed an increasing disparity between rapidly developing regions and regions with slower development, prompting population migration from regions with slower development to rapidly developing regions. In Inner Mongolia, this migration has resulted in the outflow of people from less-developed areas to urban centers (Li and Liu 2023). Consequently, pastoral regions face new challenges, including population aging, village depopulation, and household decline, making it difficult for pastoral households to sustain their livelihoods.
As China’s economy gradually opens up and international competition in the livestock industry intensifies, there is a growing need to enhance the competitiveness of Inner Mongolia’s pastoral sector. In response to this situation, the Inner Mongolia Autonomous Region government, based on the central government’s “Collective Property Rights System Reform” policy, aims to develop collective stock economic cooperatives 1 to maintain regional functionality amid population decline and strengthen the competitiveness of the pastoral industry.
This study aims to analyze the implementation stages and process of the “Collective Property Rights System Reform” policy in the pastoral areas of Xilingol League through an on-site investigation. Specifically, it seeks to gain a concrete understanding of the policy by examining the operation of the Collective Stock Economic Cooperative established under this reform.
The remainder of this article is organized as follows. The next section explains the establishment process and background of the “Collective Property Rights System Reform.” The following section elucidates the overall implementation status of the Xilingol League reform. The subsequent section focuses on the “A-gacha Collective Stock Economic Cooperative” as a typical case of collective stock economic cooperatives, particularly examining the three stages of the implementation process: “asset inventory,” “member identification,” and “asset share quantification.” Through on-site visits and interviews, the actual situation has been examined to form a concrete image of how “Collective Property Rights System Reform” is being implemented in Xilingol League. Finally, the last section clarifies the local development conditions and issues, summarizes the research findings, and presents the development prospects of collective stock economic cooperatives in pastoral areas.
2. Origin of the “Collective Property Rights System Reform”
From 2004 to 2010, the central government of China prioritized the “Three Rural Issues”: agriculture, rural areas, and farmers. In recent years, the “No. 1 Document” 2 has focused on “increasing farmers’ income” and the “harmonious development between rural and urban areas.” In China, pastoral areas are included under rural areas, and the “three pastoral issues” encompass livestock farming, pastoral areas, and livestock farmers.
The incomes of livestock farmers and urban residents differ. Figure 1 shows the average annual income trends of residents in the pastoral and urban areas of Xilingol League from 2014 to 2022. In 2014, a gap of 16,747 yuan was observed in the annual income between pastoral and urban residents in Xilingol League, which expanded to 24,130 yuan in 2022. Over nine years, the income gap increased by approximately 70%, leading to significant social inequality.
Income Disparity between Urban and Pastoral Areas
Source: Office of the Xilingol League Party History and Local Chronicles Compilation Committee (2019, 237).
The “Collective Property Rights System Reform” has been proposed as a solution to address such income disparities. Since the Central Committee of the Communist Party of China and the State Council published in 2016 the “Opinion on Steadily Promoting the Reform of the Collective Property Rights System,” hereinafter referred to as the “Opinion,” various regions across the country have actively sought new approaches and models for collective economic development centered on reforming the collective property rights system. Changfu Han, the former Minister of Agriculture of China, explained:
Property rights systems form the foundation of market economies. To improve the socialist market economic system, promote the equal exchange of production factors between urban and rural areas, accelerate the development of modern agriculture, and create new rural areas, it is necessary to reform the rural collective property rights system and strengthen the protection of rural collective assets’ property rights. (Ministry of Agriculture of China 2017)
The primary reason for the reform was the unclear ownership of rural collective assets, which eroded the foundation of the rural collective ownership system. The second reason is the unclear rights and responsibilities concerning rural collective assets, which impact rural social stability. The third reason is the inadequate protection of collective rural assets, leading to issues such as land degradation and desertification (Ministry of Agriculture of China 2007).
This policy aims to address the issues of unclear ownership, rights, and the inadequate protection of collective rural assets. First, it aims to protect the rights of members of rural collective economic organizations, forming a crucial basis for the reform. The focus is on clearly identifying the members of rural collective economic organizations. Additionally, it seeks to establish systems for registering members of collective economic organizations, ensuring legally protected land contract management rights, homestead use rights, and collective profit distribution rights, thereby enabling farmers to democratically manage collective economic activities. Second, it aims to develop new types of collective economic cooperation among farmers. Based on the requirements of the modern property rights system for “clear ownership of collective assets, clear rights and responsibilities, strict protection, and smooth circulation,” the reform seeks to develop rural collective economic cooperatives tailored to actual conditions (The State Council of the People’s Republic of China 2014).
Collective stock economic cooperatives operate on the principle of distributing profits based on the number of shares, similar to a joint-stock company (Kong 2020). However, decision-making follows a one-person-one-vote system, akin to a cooperative. Ideologically, it aims to balance capitalist operational efficiency with socialist equality. In this study, because the Collective Stock Economic Cooperative embodies characteristics of both a joint-stock company and a cooperative, we will refer to it as “Collective Stock Economic Cooperative” without translating it as either “joint-stock company” or “cooperative.”
In pastoral areas, constructing infrastructure and providing public services are challenging tasks. However, developing collective economies is relatively feasible compared with the process in agricultural areas. Unlike agricultural areas that lack collectively utilized land resources, pastoral areas traditionally possess vast communal grasslands and collectively owned livestock, such as cattle and sheep. However, many agricultural regions lack these resources. Challenges in developing collective economies in pastoral areas include a lack of managerial talent, limited investment channels, and low enthusiasm for participation among livestock farmers. 3
Herein, the construction process of the A-gacha Collective Stock Economic Cooperative in southeastern Xilingol League is explained through an on-site investigation. By examining the construction process, we aim to gain a concrete understanding of the “Collective Property Rights System Reform” in Xilingol League through the methods employed by the local Collective Stock Economic Cooperative.
3. Theoretical Basis of the “Collective Property Rights System Reform”
In recent years, collective stock economic cooperatives have gradually become a popular topic in animal husbandry. Many scholars have analyzed the development of collective economies under the socialist system from different perspectives. With the passage of the “Law of the People’s Republic of China on Rural Collective Economic Organizations” by the Standing Committee of the National People’s Congress on June 28, 2024, China has introduced its first specialized law on rural collective economic organizations, filling a significant gap in the legal framework. Currently, the academic community mainly analyzes the impact of the reform of the rural collective property rights system on the protection of farmers’ property rights and the expansion of the rural collective economy from both comprehensive and partial reform perspectives. This law will take effect on May 1, 2025.
At the level of overall reform, scholars summarize the reform contents of the rural collective property rights system, including equity setting, equity management, equity power and governance structure, and so on, mainly based on case studies, and analyze the internal relationship between the reform of the rural collective property right system and the protection of farmers’ property rights and interests and the expansion of the rural collective economy. For example, Zhiquan Fang believes that the reform of the rural collective property rights system is an important measure to safeguard farmers’ right to distribute income from collective assets and expand the rural collective economy (Fang 2017). At the local reform level, scholars have analyzed the impact of one or several reforms on the protection of farmers’ property rights and interests and the expansion of the rural collective economy. Among them, equity setting is the key to reform, which involves the shares owned by collective members and future dividends (Deng 2021).
The theoretical foundation of rural Collective Property Rights System Reform can be elucidated from four aspects: property rights delineation, Marxist theory, the development of collective ownership, and institutional change theory.
3.1. The Foundation of Property Rights Delineation
First and foremost, the reform of the collective property rights system necessitates the clarification and definition of collective assets, including the ownership, management, and usage rights of these assets, as well as the specification of the ways and restrictions on exercising these rights (Kong 2020). This process underscores the importance of property rights delineation in property rights theory. Proposed by Coase (1960), property rights theory emphasizes that a reasonable arrangement of property rights can incentivize members, improve production efficiency, and yield greater returns. The arrangement of property rights in collective shareholding economic cooperatives is conducted openly and fairly, ensuring clear allocation of rights among pastoral household members, thereby enhancing their motivation and productivity.
3.2. The Foundation of Marxist Theory
The property rights system reform is also grounded in the property theory of Marx and Engels. They advocated for the abolition of capitalist private ownership and the establishment of a system where the means of production are owned by the entire society. Cooperatives are seen as a transitional form to achieve this goal. Marx and Engels’s theory emphasizes the interchangeable use of collective ownership and social ownership, viewing collective ownership as a manifestation of social ownership (Xiao 2024).
3.3. The Foundation of Institutional Change Theory
According to institutional change theory, the reform of the rural collective property rights system represents a significant transformation in China’s rural collective management system. This reform involves the participation of the government, village collectives, and farmers, aiming to bridge the gap between insufficient institutional supply and demand. Changes in the institutional environment create external conditions for reform, while participants drive the transformation to achieve greater potential benefits (Victor and Su 1990). When potential benefits exceed the costs of reform, institutional innovation is triggered. Various levels of government and village collectives design institutions to capture these benefits, with reform methods including top-down mandatory approaches and bottom-up voluntary approaches. When participants realize that the benefits of reform outweigh the costs, they actively promote institutional change.
In conclusion, the theoretical foundation of rural Collective Property Rights System Reform integrates property rights theory, Marx and Engels’s property theory, their successors (including Lenin’s practical explorations), and institutional change theory. These theories collectively emphasize the social ownership of the means of production and the importance of cooperatives as a transitional form, shaping a unique path of collective ownership reform tailored to China’s national conditions.
4. “Collective Property Rights System Reform” in Xilingol League
4.1. Overview of Xilingol League
Xilingol League is one of the 12 leagues in the Inner Mongolia Autonomous Region of the People’s Republic of China. The administrative office is located in Xilinhot City, China. Xilingol League is situated in the central part of the Inner Mongolia Autonomous Region, forming a part of the Mongolian Plateau and bordering Mongolia. It is one of the world’s four major natural grasslands and the only national grassland nature reserve in China registered with the United Nations Man and Biosphere Protection Network.
Most of Xilingol League is a pastoral area in which horses, cattle, donkeys, camels, sheep, and goats are extensively raised. It serves as an important green livestock production base in northern China. The league spans approximately 700 km east to west and 500 km north to south, covering an area of 203,000 km2, of which 179,600 km2 is grassland. Xilingol League has 577 gachas (villages) and 278 village committees. As of the end of 2023, the league’s permanent population was approximately 1,116,500, with 842,800 registered as urban residents and 273,700 registered as rural residents. The urbanization rate of the permanent population was 75.48%, an increase of 0.85 points from 2022. 4
Regarding mineral resources, the proven coal reserves in the league total 104.6 billion tons, with an estimated total coal resource of 260 billion tons. Xilingol League has been designated as a key national development base for coal-fired power generation. As of the end of the 2022 livestock year (end of June), Xilingol League had approximately 2,120,700 cattle, 261,400 horses, 10,161,000 sheep, 466,000 goats, 14,500 camels, and 48,100 pigs. 5
In May 2015, with the approval of the State Council, the Ministry of Agriculture, the Central Agricultural Office, and the State Forestry Administration launched the first pilot of the “Collective Property Rights System Reform” in 29 counties (including cities and districts), many of which were agricultural areas in relatively economically developed coastal provinces. In 2017, the pilot areas were expanded to 100 counties, including Sunite Left Banner (county) in Xilingol League, which was the first pastoral area to be selected as a pilot site for the “Collective Property Rights System Reform.” 6
The pilot reform in pastoral areas began later than that in coastal agricultural areas because the reform models from coastal agricultural regions could not be directly transferred to pastoral areas. The economic conditions of the coastal agricultural regions and pastoral areas differ. Coastal agricultural areas receive more foreign direct investment than inland pastoral areas, where the primary issue is managing development rather than addressing disparities. By contrast, in pastoral areas such as Xilingol League, introducing external investment is difficult, and the fundamental issue lies in the unequal development of urban and rural areas.
In 2017, Sunite Left Banner in Xilingol League became the second pilot area for national reform. In 2018, based on the aforementioned “Opinion,” the People’s Government of the Inner Mongolia Autonomous Region (2019) released the “Work Plan for the Pilot Reform of the Collective Property Rights System in Rural and Pastoral Areas of the Inner Mongolia Autonomous Region” (hereinafter referred to as the “Plan”). This plan includes six principles, two goals, three stages, and 13 procedures. The six basic principles are as follows: (1) adhering to legal and policy standards; (2) respecting the intentions of farmers and livestock farmers; (3) adopting region-specific measures; (4) proceeding steadily and gradually; (5) upholding the leadership of the Party; and (6) strictly following operational procedures. The two goals aim: to complete the basic work of clearing collective assets and confirming the membership of collective economic organizations in rural and pastoral areas across the region in 2019 and to complete the basic work of the stock cooperative reform of collective operating assets and the construction of collective economic organizations in 2021 (see Figure 2).
Flow of Collective Property Rights System Reform
Source: Compiled by the A-gacha Group Stock Economy Cooperative, based on comprehensive data on the Collective Property Rights System Reform.
The Collective Property Rights System Reform initially began in Sunite Left Banner; however, owing to its significant achievements in 2018, the People’s Government of the Inner Mongolia Autonomous Region, based on the “Opinion,” publicly released the “Plan” and implemented it comprehensively throughout Inner Mongolia, including Xilingol League. Therefore, in Xilingol League, the subject of this study, “Collective Property Rights System Reform” began in 2017 and progressed significantly from 2018 onward.
The following section explains the construction of collective stock economic cooperatives implemented in Xilingol League, Inner Mongolia Autonomous Region, which is consistent with the progress of this “Plan.”
4.2. Collective Stock Economic Cooperative
Since the implementation of the reform and opening-up policy in 1978, the people’s communes and collective farming systems have been dismantled. The reform and opening-up policy began in rural areas, which have the largest populations. A representative policy is the agricultural contracting system. In pastoral areas, this was a grassland and livestock dual-contracting system wherein both livestock and grasslands were contracted by each pastoral household. Through these contracts, pastoral households obtain the right to use and benefit from their livestock and grassland. During the contract period (generally 30–50 years), livestock management is conducted while certain taxes are paid. However, livestock and grassland contracts were not implemented simultaneously; initially, livestock contracts were introduced, followed by grassland contracts for more than a decade. The timing of the grassland contract introduction varied slightly by region.
Living close to the contracted land was convenient for livestock farmers; however, this also resulted in a dispersed population over vast areas, leading to difficulties in infrastructure construction and maintenance. The introduction of the dual-contracting policy further weakened collective power. Additionally, the management of sparsely populated livestock farmers over vast areas became challenging for the county and township public sectors, resulting in little improvement in the quality of life of residents and their connection with the outside world.
In 2017, just before Xilingol League People’s Government implemented the “Collective Property Rights System Reform” policy, the pastoral population in Xilingol League, which focused on pastoral production, accounted for 55% of the total population. 7 There were many impoverished villages. Thus, Xilingol League implemented the “Collective Property Rights System Reform” to maintain regional functions and improve competitiveness in the pastoral industry. Here, we clarify the position of the Collective Stock Economic Cooperative in the “Collective Property Rights System Reform.”
The goal of the central government’s “Collective Property Rights System Reform” is to complete the liquidation of collective assets and the confirmation of membership in collective economic organizations, as well as the cooperative reform of collective operating assets and the construction of collective economic organizations (collective stock economic cooperatives). Thus, by establishing collective stock economic cooperatives, more property rights are granted to farmers, clarifying property rights, enhancing authority, exploring effective forms of collective ownership, strengthening collective economic power, and increasing farmers’ property income (People’s Government of the Inner Mongolia Autonomous Region 2019).
Following the decisions of the central government of China, the Inner Mongolia Autonomous Region has gradually implemented pilot reforms of the collective property rights system in rural and pastoral areas since 2016. In 2022, more than 13 million collective members across the region were confirmed, and over 3.9 million membership certificates (one certificate per household) were issued individually. A total of 11,390 collective stock economic cooperatives were established. Throughout the reform process, key stages, such as the liquidation and valuation of collective assets, identification of members of collective economic organizations, settlement and management of shares, and establishment of collective economic organizations, were emphasized to ensure the smooth progression of the reform work (Inner Mongolia Autonomous Region Agriculture and Animal Husbandry Department 2023).
5. A-gacha Collective Stock Economic Cooperative
5.1. Positioning of the A-gacha Collective Stock Economic Cooperative
“A-gacha” is located 15 km south of Xilinhot, the central city of Xilingol League, a typical grassland pastoral area. The total land area of the gacha is 333,900 mu, with a registered population of 170 households (424 people) and a permanent population of 71 households (251 people). Animal husbandry is the main industry in A-gacha, and of the total grassland area, 9,292.35 mu is collective grassland, while 324,600 mu is contracted to pastoral households, with an average contracted grassland area of 3,196 mu per household. As of the end of 2023, the total livestock in the gacha included 3,000 cattle, 225 horses, and 10,281 sheep, with an average of 42 cattle, three horses, and 145 sheep per household.
Table 1 shows the inventory status of “resources, assets, and funding” of the A-gacha Collective Stock Economic Cooperative in 2023. In 2023, the collective’s current assets (including government subsidies, as the government supports the organization of collective stock economic cooperatives) amounted to approximately 4,207,900 yuan. Collective assets included office supplies, barn facilities, transport vehicles, machinery, equipment, and livestock, totaling approximately 9,049,300 yuan. Other assets included sheep pens, water tanks, washing pools, grassland enclosures, medication pools, silos, and breeders.
Inventory of “Resources, Assets, and Funding” of the A-gacha Group Stock Economy Cooperative
| Three assets | Resources | Funding | Assets | |||||
|---|---|---|---|---|---|---|---|---|
| Categorization | Grassland resources (mu) | Working capital | Office supplies | Livestock barn | Vehicles | Machinery | Livestock assets | Other |
| Value (in 10,000 yuan) | 9,292.35 (mu) | 420.79 | 14.14 | 265.15 | 125.4 | 75.44 | 128.62 | 96.18 |
Note: All the data in the table is obtained from an interview with the head of A-gacha conducted in April 2024.
As a typical pastoral area, A-gacha was designated in 2018 as a pilot area for the “Collective Property Rights System Reform” and the strengthening of the collective economic development promoted by Xilinhot City. With six years of experience in developing the Collective Stock Economic Cooperative, A-gacha has played a representative and exemplary role in the grassland pastoral region.
5.2. Construction of the “A-gacha Collective Stock Economic Cooperative”
At the beginning of 2018, A-gacha established a Collective Stock Economic Cooperative, with all livestock farmers in the gacha becoming members. The establishment procedure of the A-gacha Collective Stock Economic Cooperative included the following steps: (1) liquidation and valuation of the assets of the collective economic organization, (2) identification of members of the collective economic organization, (3) quantification of collective assets into shares, and (4) establishment of the collective stock economic organization.
5.3. Overview of Asset Liquidation in the Study Area
The liquidation and valuation of assets in the collective economic organizations are essential and prerequisite steps for smoothly advancing “Collective Property Rights System Reform” in pastoral areas (Zhu 2020). This involves the liquidation and verification of the collective’s funds, resources, and assets (hereinafter referred to as the “three assets”). In A-gacha, the procedures for clarifying the inventory of assets include “sorting, registration, confirmation, public announcement, approval, aggregation, and database construction.” These procedures involve organizational mobilization, comprehensive sorting, and inspection in three stages, with a focus on self-examination as the primary approach. This comprehensive audit of the collective’s “three assets” laid the foundation for establishing the Collective Stock Economic Cooperative. Table 2 presents the inventory data of the “three assets” in A-gacha during the asset liquidation and valuation in 2018.
Inventory of “Resources, Assets, and Funding” for the A-gacha Collective Stock Economic Cooperative, Units of Measurement: units, items, yuan, mu (1 mu = 666.7 m2)
| Assets | Quantity | Amount(yuan) | Various Resources | Quantity(mu) |
|---|---|---|---|---|
| Cash | 4.00 | Total land area | 333,900 | |
| Bank deposits | 12,196.97 | 1. Total grassland area | 333,900 | |
| Fixed assets | 2,936,572.36 | Available pasture-land area | 333,900 | |
| 1. Office room | 188 m2 | 201,000.00 | Grassland area contracted to households | 324,600 |
| 2. Car | 1 | 35,000.00 | Gacha collective pasture area | 9292.35 |
| 3. Tractor | 1 | 126,678.00 | 2. Arable land | 0 |
| 4. Mechanical crusher | 1 | 5,470.00 | 3. Water | 0 |
| 5. Desk and chair | 60 | 7,000.00 | 4. Woodland | 0 |
| 6. Computer | 7 | 25,750.00 | 5. Sandy soil | 0 |
| 7. Power supply equipment | 1 | 634,000.00 | 6. Wasteland | 0 |
| 8. Livestock barn | 1,800 m2 | 840,000.00 | 7. Rough mountain | |
| 9. Trailer | 1 | 23,000.00 | 8. Swamp | 0 |
| 10. Milk station | 1 | 20,000.00 | 9. Other unused land | 0 |
| 11. House for storing grass | 3 | 450,000.00 | 10. Disputed grassland | 0 |
| 12. Mongolian yurt | 2 | 31,770.00 | 11. Occupation of grasslands by non-grazing household | 0 |
| 13. Printer | 2 | 3,350.00 | 12. Others | 0 |
| 14. Bookstore | 1 | 53,000.00 | ||
| 15. Flagpole | 1 | 900.00 | ||
| 16. Stove | 1 | 900.00 | ||
| 17. Mechanical well | 2 | 7,800.00 | ||
| 18. Generator | 4 | 10,386.00 | ||
| 19. Water pump | 3 | 5,150.00 | ||
| 20. Camera | 6 | 2,100.00 | ||
| 21. Used motorcycle | 1 | 2,400.00 | ||
| 22. Activity room | 202 m2 | 415,300.00 | ||
| 23. Bookshelf | 1 | 1,800.00 | ||
| 24. Other assets | 33,818.36 | |||
| Cattle | 488,944.00 | |||
| 1. Cows | 476,000.00 | |||
| 2. Horses | 0 | |||
| 3. Sheep | 12,944.00 |
Note: All the data in this table is for the year 2018 and is obtained from an interview with the head of A-gacha in April 2024.
According to the then-head of the gacha, during the asset statistics, the prices of various items were recorded at their purchase prices, and depreciation was not calculated, which is an existing problem.
5.4. Overview of Member Identification in the Study Area
Member identification in A-gacha’s collective economic organization is a prerequisite for establishing livestock farmers’ share ownership and advancing the cooperative economy. A-gacha adopted a democratic approach to decision-making by listening to livestock farmers’ intentions and considering both historical and current conditions in identifying members of the collective economic organization. Specifically, the process involved understanding the gacha population through an initial survey and registration; discussing the rules for defining collective membership; clarifying the conditions for acquiring, maintaining, and losing membership; and completing the confirmation of members of the collective economic organization.
Population surveys and registrations are crucial for recognizing members of the collective economic organization in A-gacha. Considering household relationships and residential status, A-gacha created detailed survey forms based on statistical data to determine the composition and total number of members. Using historical population records and registration forms, A-gacha registered members using grid units. 8 Booklets were created and distributed to livestock farmers, who verified the information. After ensuring accuracy, the head of each household signed and confirmed the information. To guarantee the authenticity and completeness of the member identification results, A-gacha finalized the results through a livestock farming meeting. The results were made public, and feedback was accepted to avoid omissions or false reporting.
For different types of personnel, A-gacha developed a method to define members of the collective economic organization. This method was formulated based on the initial population survey results. It was then discussed and approved through meetings between the gacha’s two committees and the representative assembly of livestock farmers. The method clarifies the conditions for acquiring, maintaining, or losing membership. Table 3 presents the conditions for defining the members of the A-gacha. Considering the fact that higher-level government agencies did not prescribe a unified method for member identification, the methods varied across different regions.
Confirmation Conditions for A-gacha Members
| Category | Condition | Confirmation Status |
|---|---|---|
| Natives of the gacha | Households and children with contracted management rights to grassland and those who have not transferred their resident registration | ◎ |
| Adopted son or daughter | Those who have adopted a child or have completed the full adoption process and have transferred their resident registration | ○ |
| Transfer of resident registration | Those who have transferred their resident registration | Reaffirmed by at least two-thirds of the livestock farmer representatives or member conventions |
| Student | Those who are enrolled in school | ○ |
| Military service members | Those who maintain the status of a group member while enlisted and have transferred their resident registration to the gacha after leaving the military service | ○ |
| Prisoners | Those who have been deprived of political rights but have not lost their civil rights | ○ |
| Married outside the family or married in | Those whose resident registration and grassland are in the gacha, with their consent and clear proof of identity | ◎ or ○ |
| Empty households | Persons who have been declared dead, unitarily renounced membership, etc. | ✖ |
| Employed | Employees of public institutions (e.g., civil servants) whose resident registration is in the gacha and who have undergone formal recruitment procedures and received financial assistance | Identified as a collective member, but does not participate in the distribution of collective economic earnings |
| Non-residents | Persons whose residence registration is in the gacha, who do not have a meadow, and who live in an outlying area | ✖ |
Source: Compiled from an interview with the head of A-gacha in August 2024.
Note: ◎ = Persons who originally had the right to contract grassland and were confirmed as collective members again this time; ○ = Persons who were confirmed as collective members for the first time; ✖ = Persons whose collective membership status was revoked/not confirmed.
5.5. Quantification of Collective Assets into Shares
Quantifying collective assets into shares involves converting these assets into shares allocated to each member of the collective economic organization, providing a basis for participating in the distribution of collective economic revenues. After completing the liquidation and valuation of assets and member identification, A-gacha developed a series of stock reform plans based on the actual situation. These plans determine the allocation method, share proportion, and shared management methods. The principles for quantifying shares were formed through discussions at the gacha’s collective economic organization’s Member Assembly.
For asset quantification, A-gacha primarily quantified operational net assets, including collectively owned buildings, machinery, bank deposits, cash, and fixed assets. Resource assets collectively owned, such as land, forests, mountains, grasslands, wastelands, and tidal flats, as well as fixed assets for public infrastructure and public services (e.g., road and transportation facilities to villages and groups, rural waterways and drinking water safety facilities, and education, culture, and health public service fixed assets), are currently excluded from the reform.
5.6. Share Distribution
Shares are divided into two types: member and collective. Member shares are allocated to individual members of the collective economic organization, while collective shares are owned by the Collective Stock Economic Cooperative. The collective shares primarily earn funds for public projects and daily administrative expenses for the gacha. In A-gacha, collective shares account for 30% of the total shares, whereas member shares constitute 70%.
A-gacha has 168 households and 371 people, with 853 shares allocated. The member shares were distributed based on the following criteria. (1) First Type: Individuals aged 0–20 received one share each; total: 56 individuals, 56 shares. (2) Second Type: Individuals aged 21–56 received two shares each; total: 148 individuals, 296 shares. (3) Third Type: Individuals aged 57 years and above received three shares each; total: 167 individuals, 501 shares.
The total number of allocated shares was 853, with each share valued at 8,034.15 yuan. The larger allocation to older individuals reflects consideration of their long-term residence and contribution to the gacha. This unique share allocation method, which differs from other gacha collective stock economic cooperatives, reflects the demographic and social conditions of A-gacha.
The total value of member shares was 6,853,129.95 yuan, accounting for 70% of the total assets, while collective shares were valued at 2,937,055.69 yuan, accounting for 30% of the total assets. The total share distribution amount was 9,790,185.64 yuan. Each household’s stock ranged from a minimum of two shares to a maximum of approximately 11 shares, which is primarily determined by the household size (larger households received more shares, whereas single-person households, common in rural areas, typically received two shares).
A-gacha issued shareholder certificates on a household basis and established a management ledger. Registration and records were kept in A-gacha, with the shareholder certificate serving as valid evidence of participation in the distribution of collective assets, management decisions, and profit sharing. From the benchmark date of December 28, 2018, at 24:00, A-gacha adopted a static management method for three years with a “no increase/decrease” management policy. This meant that there would be no increase in shares owing to new births or immigration to the gacha or any decrease in shares due to death or emigration from the gacha. After three years, minor adjustments could be made based on policy changes or changes in the collective economic organization members through discussions at shareholder (or representative) meetings. During these three years, shares could not be inherited, transferred, pledged, gifted, withdrawn, or cashed out. In the event of a member’s death, the shares would revert to the collective. However, owing to static management, discrepancies between actual household composition (e.g., members of single-person households getting married) and stocks would arise over time.
Practically, rural share management primarily follows two models: dynamic management, in which shares or holdings are adjusted according to population changes within a certain period, and static management, in which shares neither increase nor decrease, maintaining stability. The choice of the management model is primarily determined by residents. Currently, numerous regions and residents opt for the static management model, where shares are not adjusted according to population changes and any changes are decided upon at shareholders’ meetings. A-gacha operates under a static management model.
Under this model, A-gacha’s shares do not increase with birth, decrease with death, or change with migration in or out. Shares are confirmed by individuals, certificates issued to households, and shares circulated within cooperatives. Shares can be inherited within the household and transferred to other members after five years; however, no single household can hold more than 5% of the total shares. Relevant procedures, such as share-change registration and filing, must be followed. In cases including orphans or older adults without children (known as “Five Guarantees” households), 9 their shares are recovered by the cooperative and either canceled or included in shares awaiting circulation. The cooperative publicly announces its asset operational status by the end of January each year. Management systems for certificates, ledgers, and archives have also been established. Shareholders have the right to participate in decision-making, enjoy profits, transfer shares, and withdraw and inherit shares.
6. Establishment of the Collective Stock Economic Organization
After completing the series of collective property system reforms, which involved asset liquidation and valuation, member identification, and share quantification, A-gacha established the new collective economic organization, “A-gacha Collective Stock Economic Cooperative.”
The cooperative’s board of directors drafted the “Articles of Association of the A-gacha Collective Stock Economic Cooperative” based on actual conditions, which were approved by the shareholders’ representative meeting. These articles established a cooperative management system based on 11 aspects including general provisions, business scope and registered assets, share settings, organizational structure, asset management, financial management, and profit distribution. These articles serve as an effective guide for the cooperative’s operation, binding the cooperative itself, its shareholders, shareholders’ meetings, the board of directors, and the board of supervisors.
The A-gacha Collective Stock Economic Cooperative comprises three internal organizational bodies: shareholders’ representative meeting, board of directors, and board of supervisors.
6.1. Shareholders’ Representative Meeting
The shareholders’ representative meeting is the supreme authority within the cooperative; it comprises 19 representatives elected from among the livestock farmers in the gacha. The representatives are selected at a ratio of one representative per 20 shareholders. The meeting holds significant powers, including the authority to elect members of the board of directors and board of supervisors, make personnel decisions, and determine major matters such as development plans and profit distribution. Each representative serves a four-year term. Notwithstanding the name “shareholders’ representative meeting,” it operates on a one-person-one-vote system rather than a one-share-one-vote system.
6.2. Board of Directors
The board of directors acts as the executive body of the shareholders’ representative meeting and is accountable for it. The board comprises four directors, including one chairman. The chairman is elected through a candidate election process in shareholders’ representative meeting and is re-elected every four years. The board of directors is responsible for the day-to-day management and operational decisions of the cooperative.
6.3. Board of Supervisors
Similar to the board of directors, the board of supervisors is formed through an election process and consists of three supervisors, including one chairperson. The board of supervisors is also accountable to the shareholders’ representative meeting. The primary function of the board of supervisors is to oversee the activities of the board of directors and financial operations of the cooperative. To ensure their independence and avoid conflicts of interest, supervisors must not hold concurrent positions on the board of directors or among financial officers.
This structure ensures a balanced and democratic management system that promotes transparency and accountability within the A-gacha Collective Stock Economic Cooperative (see Figure 3).
A-gacha Collective Stock Economic Cooperative
Source: Created by the author based on data provided by A-gacha.
Daily discussions about the operations were conducted using WeChat. In December 2018, the A-gacha Collective Stock Economic Cooperative and village-run enterprise (Z-Culture and Media Co., Ltd.) were established, along with a collectively owned cattle breeding base. Sixty-four cattle were raised. The employees were gacha residents. Additionally, the Z-Culture and Media Co., Ltd., was established in Xilinhot City. This company is part of the collective economy of A-gacha, and in 2020 an investment of 500,000 yuan was made in the company. This company engages in various businesses such as printing, advertising, graphic design production, ceremonial services for weddings and funerals (the demand for ceremonial services has increased rapidly in recent years with the improvement of living standards), office services such as typing and copying, and translation between Mongolian and standard Chinese. Although Z-Culture and Media Co., Ltd., is still in the trial operation stage, its business is progressing well. Currently, the company has eight employees; however, new personnel are being recruited to expand operations (see Figure 4). Because the residents of A-gacha do not have IT skills, the employees of the company are residents of Xilinhot City. While employing gacha residents increases gacha income, it also paradoxically encourages A-gacha residents to move to Xilinhot City.
The total incomes of the collective economy in 2020 and 2022 were 400,000 yuan and 714,000 yuan, respectively. 10 The main sources of income are the sale of the collective’s livestock and rental income from collectively owned buildings (there is an 80-square-meter commercial property in Xilinhot City; see Figure 5).
Since the establishment of the A-gacha Collective Stock Economic Cooperative, six collective economic industrial projects have been implemented, with a total investment of 3.56 million yuan. 11 Project investments are fully subsidized by the government, which focuses on organizing collective joint-stock economic cooperatives. The specific contents of collective economic industrial projects include infrastructure development such as roads, electricity, information and communication, and water supply, which have contributed to improving residents’ living standards. Currently, 62 permanent households in the gacha are connected to the Internet and electricity, with an electrification rate of 87.32%. As of January 2024, 65 water source wells had been constructed, and 8 km of roads managed by the gacha had been paved with concrete. 12 A digital communication network has been implemented throughout the gacha. Although not directly related to cooperatives, housing improvements have also been promoted through government support. Permanent-resident households were equipped with brick and tile houses measuring more than 45 m2, and almost all livestock enclosures were covered. Living standards in pastoral areas have lagged behind those in rural areas; however, as living standards in rural areas have improved, the government has also focused on improving living standards in pastoral areas.
7. Conclusion
In summary, the key points discussed are as follows.
Urbanization has progressed since the reform and opening-up policy. After the dual-contract system (livestock and grassland) was implemented, farmers’ interest in matters outside of their contracted land decreased. This has led to increased dispersion of people across vast areas, making the government’s management of people more difficult. The government’s introduction of new collective management aims to manage livestock farmers and sustain the declining gacha. From this perspective, evaluating the achievements of the A-gacha Collective Stock Economic Cooperative offers several contributions.
By jointly raising beef cattle, the cooperative has contributed to improving the income of gacha residents. Additionally, various businesses and real estate rentals in Xilinhot City have boosted their incomes. The cooperative has become a conduit for government-funded infrastructure projects, such as roads, electricity, water supply, and telecommunications, which have significantly improved residents’ living conditions.
The full participation of gacha residents in the Collective Stock Economic Cooperative has also fostered a sense of community and restored government leadership. Residents showed a high interest in the cooperative and an increased willingness to participate in gacha management. Organizing the cooperative around previously underutilized collective assets has contributed to the maintenance and development of the gacha.
Currently, because the sale of shares in the Collective Stock Economic Cooperative is restricted, equality is being maintained among livestock farmers. However, there is a potential risk of secret share-trading among residents, leading to inequality, where some may lose their shares while others accumulate a large number of shares. There is a precedent in which, despite its prohibition, the sale of contract rights for livestock and grasslands occurred, forcing the government to establish a use-rights system. If similar issues were to arise with a cooperative’s share, they could exacerbate conflicts among residents and jeopardize regional stability. Ensuring the maintenance of equality remains a significant challenge.
The introduction of collective management systems, such as the A-gacha Collective Stock Economic Cooperative, has shown promise in enhancing economic stability and improving living standards. However, ongoing vigilance is required to address the potential inequalities and maintain community cohesion.
